Overview: Hawkish comments from an influential Fed official were negative for mortgage rates over the past week. Recent economic data had little impact. Mortgage rates ended the week a little higher but remained near the best levels of the year. In addition, existing-home sales were up despite tight inventory and rising home prices.
Following the hawkish Fed meeting on June 14, mortgage rates continued to increase a little on Thursday. The upward move added another small leg on Monday due to comments from influential New York Fed President, William Dudley. Dudley came out strongly in favor of further tightening of monetary policy, saying that slowing the pace actually could harm the economy. He said that he is “very confident” that the economic expansion has “quite a long way to go.” He also predicted that a tighter labor market would lead to wage inflation, which would help boost the overall inflation level in the economy up to the Fed’s target level of 2.0%.
According to the chief economist of the National Association of Realtors (NAR), “We have a housing shortage.” It’s clear from the data released on Wednesday why he said this. Total inventory of existing homes for sale was 8% lower than a year ago and was at just a 4.2-month supply. A 6.0-month supply is considered a healthy balance between buyers and sellers. Properties remained on the market for an average of just 27 days in May, which was the shortest duration since tracking began in 2011. The lack of supply caused the median existing-home price to reach a record level in May. Despite a shortage of inventory in many regions, sales of previously owned homes in May increased 1% from April and were 3% higher than a year ago [AL1]John – since this is a summary of the content below, I was thinking we could format it differently to set it apart from the body. Maybe it’s changing the color or making it bold? Let me know what you think. .
Looking ahead, New Home Sales data will come out on Friday. The Durable Goods report, an important indicator of economic activity, will be released on June 26. The Pending Home Sales report will come out on June 28. The core Personal Consumption Expenditures (PCE) Price Index, the inflation indicator favored by the Fed, will be released on June 30. In addition, there will be Treasury auctions on June 26, 27, and 28.