Overview: Over the past week, strength in the stock market was mildly negative for mortgage rates. But the reaction to the economic data was minor, and mortgage rates ended the week only a little higher.
Home construction increased more than expected in March. However, this was entirely due to a rise in multi-family housing units. Single-family housing starts fell 4% from February to an annual rate of 867,000 units. Permits to build single-family homes dropped 6% from February to the lowest level since September 2017. These figures tend to be volatile from month to month due to the weather and other factors, so the March data was not too troubling to investors. The question is whether the downward trend will continue in the future.
Following three straight months of declines, Monday’s report on retail sales was encouraging. Retail sales in March rose a solid 0.6% from February, which was higher than expected. Consumer spending accounts for roughly 70% of U.S. economic activity, so this report is closely watched. The retail sales data does not include spending on most services.
Looking ahead, the Existing Home Sales report will be released on April 23, followed by the New Home Sales report on April 24. The Durable Goods report, an important indicator of economic activity, will come out on April 26. The first reading for first-quarter gross domestic product (GDP), the broadest measure of economic growth, will be released on April 27. Finally, the next European Central Bank meeting will take place on April 26 and could influence U.S. mortgage rates.