In the past week, the economic landscape witnessed several noteworthy developments. Key indicators such as new and pending home sales, inflation, consumer sentiment, mortgage rates, and jobless claims were closely monitored. This article summarizes the key takeaways and provides a glimpse into the upcoming economic reports.
Shift to New Homes amid Shortage of Previously-Owned Homes:
Due to the attractive mortgage rates secured during the pandemic, homeowners showed reluctance to sell their properties. Consequently, the limited availability of previously-owned homes prompted prospective buyers to explore new home developments as an alternative.
Stagnant Pending Home Sales and Inflation Concerns:
Pending home sales remained unchanged in May, contrary to expectations of a modest increase. This lack of growth was attributed to rising mortgage rates and economic uncertainties, deterring both sellers and buyers. Inflationary pressures persisted, with a 0.40 percent increase in prices for goods and services in April, surpassing the previous month’s 0.10 percent rise. Year-over-year inflation reached 4.40 percent in April, further fueling consumer concerns.
Fannie Mae Predicts Recession:
In line with consumer apprehension, Fannie Mae, the government-sponsored mortgage organization, forecasted a recession in the latter half of 2023. This prediction validated the worries surrounding inflation and the overall state of the economy.
Federal Reserve Divided on Monetary Policy:
Minutes from the Federal Reserve’s recent meeting unveiled a division among policymakers regarding the decision to raise the key interest-rate range to 5.00 percent and 5.25 percent. Some members expressed the possibility that the interest rate hike in May could be the last for the foreseeable future, given the growing anticipation of a recession.
Upward Trend in Mortgage Rates and Jobless Claims:
Mortgage rates experienced an upward trajectory, as the average rate for 30-year fixed-rate mortgages rose by 18 basis points to 6.57 percent. Similarly, the average rate for 15-year fixed-rate mortgages increased by 22 basis points to 5.97 percent. Additionally, there was a slight increase in jobless claims, with 229,000 initial claims filed, surpassing the prior week’s figure of 225,000 claims filed.
Upcoming Economic Reports:
Looking ahead, this week’s economic reports will cover public and private-sector jobs, the national unemployment rate, and the latest updates on mortgage rates and jobless claims.
