Overview: As the stock market continued to decline over the past week, investors shifted assets to bonds, including mortgage-backed securities. As a result, mortgage rates ended the week a little lower.
The housing data released this week was encouraging. After a surprisingly strong decline of 5% in January to the lowest reading in over three years, contracts signed to purchase previously owned homes increased 3% in February. These pending home sales are viewed as a leading indicator of the existing home sales data, which measures actual closings and will be released on April 23.
The most recent revision to fourth quarter gross domestic product (GDP), the broadest measure of economic growth, showed an increase to a solid level of 2.9% from the prior reading of 2.5%. Early in 2018, the forecasts from many leading economists for first quarter GDP were for even stronger growth, but predictions have been moving steadily lower since then. Perhaps the most widely followed GDP prediction is put out by the Federal Reserve Bank of Atlanta. At the end of January, the Atlanta Fed forecast for first quarter GDP growth was a shockingly high 5.4%. The most recent reading is just 1.8%, which is in line with the consensus of leading economists. The first quarter GDP data will be released on April 27.
Looking ahead, the core Personal Consumption Expenditures (PCE) Price Index, the inflation indicator favored by the Fed, will be released on Thursday. The Institute for Supply Management (ISM) Manufacturing Index will come out on April 2, followed by the ISM Services Index on April 4. The next Employment Report will be released on April 6. Mortgage markets will close early on Thursday and will be closed on Friday in observance of Good Friday.