Lower Inflation
- Mortgage Returns
- Apr 30
- 2 min read
Overview: Mortgage markets remained volatile over the past week, and the major economic data was generally a little weaker than expected overall. As a result, rates ended the week lower.
Federal Reserve officials keep a close eye on inflation, and the Personal Consumption Expenditures (PCE) Price Index is their favored indicator. In March, core PCE was 2.6% higher than a year ago, close to expectations, and down from a 3% annual rate of increase last month. This was the lowest reading since March 2021. Progress toward the Fed’s 2% target remains challenging, and this desired level has not been achieved since February 2021. Investors are watching closely to see if higher tariffs will exert upward pressure on future inflation levels.
Gross domestic product (GDP) is the broadest measure of economic activity. During the first quarter of 2025, U.S. GDP fell at an annualized rate of 0.3%, the first negative reading since the first quarter of 2022. This was below the consensus forecast for an increase of 0.4% and down from 2.4% during the fourth quarter. The overwhelming story was a massive surge of 41% in imports, as businesses and consumers rushed to purchase ahead of rising prices due to higher tariffs. Imports subtract from GDP, and they took over five percentage points off the reading. On the other hand, the extra purchases will likely reduce the quantity of imports next quarter, raising the GDP reading.
In March, sales of existing homes fell 6% from February, more than the consensus forecast. This marked the slowest pace for March since 2009. The median existing-home price of $403,700 was up 3% from last year at this time and at a record high for March. Inventories remain low in many regions, standing at just a 4-month supply nationally, far below the 6-month supply typical in a balanced market. However, it’s worth noting that inventories were 20% higher than a year ago.
Core PCE (annual % change)
Week Ahead
May 1
Institute for Supply Management (ISM) Manufacturing Index
May 2
Employment Report
May 5
ISM Services Index
May 7
Federal Reserve meeting
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