Overview: With a lack of significant economic news over the past week, it was a relatively quiet period for mortgage markets, and rates ended nearly unchanged.
The major economic data this week came mostly from the housing sector, where higher mortgage rates and a low supply of homes on the market continue to restrain activity. Sales of existing homes, which typically make up about 90% of the market, rose slightly in May from April but still were 20% lower than last year at this time. Inventory levels remain a big trouble spot, standing at just a 3-month supply nationally, far below the roughly 6-month supply that is generally seen in a balanced market. The median existing-home price of $396,100 is 3% lower than last May, which represents the largest annual decline since 2011.
Benefitting from the scarcity of previously owned homes on the market, sales of new homes, which account for the remaining 10% of the market under normal conditions, far surpassed expectations this month. New-home sales jumped 12% from April to May, reaching the highest level since February 2022 and marking a 20% increase over last May. The median price of a new house in May was $416,300, which was 8% lower than last year at this time. Notably, roughly 30% to 35% of homes listed for sale are new homes, far out of proportion to their usual much smaller share. This is another indication of the severe lack of existing homes available to buyers.
With inflation in focus, the monthly consumer confidence report published by the Conference Board has been receiving more attention lately, since it may provide hints about upcoming changes in spending habits. The latest reading revealed a much larger than expected increase in consumer confidence, soaring to the highest level since January 2022. There were some interesting divergences in the details of the report. While consumers expected the labor market to remain very strong, they said that they intended to scale back a little on purchases of large appliances and motor vehicles and to make cuts in vacation plans later in the year.
Existing-Home Sales (millions)
Personal Income and Outlays
Personal Consumption Expenditures (PCE) Price Index
July 3 — Institute for Supply Management (ISM) Manufacturing Index
July 6 — ISM Services Index
July 7 — Employment Report