It was a relatively quiet week for mortgage rates. The major economic data came in close to the expected levels, and there was little decisive news about the trade negotiations with China.
The most significant economic data released this week came from the housing sector, and lower mortgage rates have been boosting recent activity. In October, sales of previously owned (existing) homes increased from September and were 5% higher than a year ago. National median existing-home prices were up 6% from a year ago. A lack of inventory remained the primary trouble spot in many regions, as the number of homes for sale was at just a 3.9-month supply nationally, well below the 6.0-month supply which is considered a healthy balance between buyers and sellers.
However, the latest reports contained signs that the pace of construction may be picking up, which could help ease tight inventory levels. In October, housing starts showed solid improvement from September and were 9% higher than a year ago. Building permits, which are a leading indicator of future construction, posted even stronger monthly gains and were at the best level since May 2007. In addition, the NAHB housing index showed that home builder confidence remained around 70, far above the readings near 60 seen a year ago.
The minutes from the October 30 Fed meeting were consistent with recent comments from Fed officials and caused little reaction. In short, the minutes indicated that further changes in monetary policy will be unlikely as long as the economy performs roughly as expected with modest growth and inflation near the Fed’s target level. Officials highlighted uncertainty about the impact of trade tensions on global economic activity as a potential risk to the economic outlook.
Looking ahead, New Home Sales will be released on Tuesday. Core PCE, Durable Orders, Personal Income, and Pending Home Sales will come out on Wednesday ahead of the holiday. In addition, news about the trade negotiations with China or the impeachment inquiry could have an influence. Mortgage markets will be closed on Thursday and will close early on Friday for Thanksgiving.