Overview: Following the March 17 Federal Reserve meeting, mortgage rates climbed higher for a couple of days and then reversed direction without any significant news. The reaction to the economic data released over the past week was minor, and mortgage rates ended the week with little change.
In February, higher mortgage rates and severe weather in many regions caused home sales to slip a bit from the extremely strong pace seen over the last several months. Existing-home sales, which make up about 90% of the market, fell 7% from January, but still were 9% higher than a year ago. The median existing-home price was 16% higher than last year at this time, at a new record for February of $313,000. Inventory levels were down 30% from a year ago to the lowest since 1982 and remained a major obstacle. The number of homes for sale was at just a 2-month supply nationally. February new-home sales, which account for the remaining 10% of the market, also fell more than expected, with a decline of 18% from January.
Home construction was negatively impacted by poor weather conditions in February as well. Housing starts fell 10% from January, which was a larger than expected decline. In addition to bad weather, home builders pointed to higher costs for land, labor, and materials as other headwinds to faster production.
Existing-Home Sales (millions)
March 26 — Personal Income and Outlays
March 26 — Core Personal Consumption Expenditures (PCE) Price Index
April 1 — Institute for Supply Management (ISM) Manufacturing Index
April 2 — Employment Report