Weekly Economic Update - 3.20.18
I hope you had a great weekend.
RATE MOVEMENT (from prior week) SLIGHTLY LOWER
Last week was relatively quiet for mortgage rates ahead of the Fed meeting which takes place tomorrow. The primary surprise was a decline in retail sales, which was positive for mortgage rates, and rates finished the week slightly lower.
IMPORTANT ECONOMIC FACTORS:
Retail Sales - Consumer spending accounts for about 70% of economic activity in the U.S., making the retail sales data a highly anticipated report each month. Following the hurricanes last fall, retail sales were very strong for three months, causing most economists to expect that consumer spending would remain strong in 2018. However this has not been the case, as Wednesday’s report revealed that retail sales in February unexpectedly declined for the third straight month.
Housing Data – Friday’s report on housing starts contained mixed news. In February, total housing starts fell 7% from January, dropping well below the expected level. However, this was entirely due to a large decline in highly volatile starts of multi-family units. Single-family starts in February rose 3% from January, and there were 501,000 single-family units under construction, the most since June 2008. This was encouraging news since a lack of inventory has been holding back home sales in many regions.
Looking ahead, the big news will be tomorrow’s Fed meeting. Investors widely expect a 25 basis point increase (i.e. 0.250%) in the federal funds rate, and they will be seeking guidance about the pace of future rate hikes. The Fed’s decision tomorrow to increase rates AND layout future rate hikes COULD trigger mortgage rate volatility later this week.
Please let me know if you have any questions in regards to this.
Thank you for your continued support, have a productive week.
SVP, Regional Manager
The Crawford Team