Overview: With major economic news winding down for the year, it was a relatively quiet week for mortgage markets. Consumer spending was stronger than expected, but its impact was minor, and rates ended slightly lower.
Despite higher prices and credit card rates, consumer spending has continued to exceed the forecasts of economists. In November, retail sales climbed 0.3% from October, far above the consensus forecast for a small decline. Restaurants/bars, hobby stores, and sporting goods were some of the categories that posted significant gains. Of note, retail sales were 4.1% higher than a year ago, but are not adjusted for inflation, and the increase in average prices over that period was close to just 3%.
Helped by lower mortgage rates in November, sales of existing homes rose 1% from October, but still were 8% lower than last year at this time. Last month was the slowest sales pace since October 2010. Inventory levels stubbornly stand at just a 3.5-month supply nationally, far below the 6-month supply typical in a balanced market. The median existing-home price of $387,600 was 4% higher than last year at this time. Mortgage rates have declined more sharply in recent weeks, so sales activity next month likely will improve.
Given the severe shortage of homes in many regions, additional inventory continues to be desperately needed, and the data released this week was very encouraging. In November, single-family housing starts increased 18% from October to the highest level since April 2022 and were 42% higher than a year ago. Similarly, single-family building permits, a leading indicator, rose to the best level since May 2022.
Existing-Home Sales (millions)
Week Ahead
December 22
New-Home Sales report
Personal Income and Outlays
Personal Consumption Expenditures (PCE) Price Index
Mortgage markets close early for Christmas holiday
December 25
Mortgage markets closed
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