A Steady Economy
There were no major surprises in the economic data released last week. Investors were focused on the latest inflation report, and it came in right in line with expectations. As a result, mortgage rates ended last week with little change.
Core PCE
Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator. In May, core PCE, which excludes food and energy to reduce short-term volatility, was up 2.6% from a year ago. This was down from an annual rate of increase of 2.8% last month and the lowest level since March 2021. While far below its recent peak, it remains above the Fed’s target of 2.0%.
Shift in Spending Habits
With inflation in focus, the monthly report on consumer confidence published by the Conference Board has been receiving more attention lately, since it may provide hints about upcoming changes in spending habits. The most recent reading showed a modest decline from last month, matching the consensus forecast. Concern about the political environment was the most common reason cited for the drop in confidence this month. According to the report, fewer consumers planned to buy autos and appliances, but more planned to go on vacation.
Housing Trends
In the housing sector, high mortgage rates in May again were an obstacle to purchasing activity. Sales of new homes in May unexpectedly dropped 11% from April to the lowest level since November and were 17% lower than a year ago. The median new-home price of $417,400 was slightly lower than last year at this time. There were 481,000 new homes on the market at the end of May, the highest level since January 2008.
Mortgage Rates for the week of 7-01-2024