Overview: While there was little major economic news over the past week, it was a volatile period in anticipation of several significant economic events in the near future. The net result was that mortgage rates ended the week slightly higher.
In June, sales of both existing and new homes fell short of expectations. Existing home sales, which account for roughly 90% of the market, decreased slightly from May and were 2% lower than a year ago. The inventory of existing homes for sale rose from May, and was a bit higher than a year ago. This was the first year-over-year increase in inventory levels since June 2015. The median existing-home price was 5% higher than a year ago.
After a strong increase in May, June new home sales decreased a surprising 5% to the lowest level since October 2017. Even with the drop, though, sales were 7% higher in the first six months of 2018 than they were during the same period in 2017. The inventory of new homes available for sale rose to 301,000, the highest level since March 2009. Builders point to rising material costs and shortages of land and labor as obstacles to the construction of more affordable homes..
Looking ahead, there will be a European Central Bank meeting on Thursday, which could influence U.S. mortgage rates. The Durable Goods report, an important indicator of economic activity, will come out on Thursday. The first reading for second quarter gross domestic product (GDP), the broadest measure of economic growth, will be released on Friday. The consensus is for GDP growth of around 4.0%, which is double the pace seen during the first quarter. The core Personal Consumption Expenditures (PCE) Price Index, the inflation indicator favored by the U.S. Federal Reserve, will come out on July 30. The next Fed meeting will take place on August 1.