Inflation Holds Steady
Last week was a quiet week for mortgage markets. The major inflation data came in very close to the expected levels, and the other economic reports also caused little reaction. Mortgage rates ended last week nearly unchanged, remaining near the lowest levels since early 2023.
Core PCE Rises Slightly
Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator. In August, core PCE, which excludes food and energy to reduce short-term volatility, was 2.7% higher than a year ago. This was up from an annual rate of increase of 2.6% for the last several months, the lowest levels since March 2021. While far below its recent peak, further progress toward the Fed’s target of 2.0% remains challenging.
Consumer Confidence Fluctuates
The monthly report on consumer confidence published by the Conference Board revealed a rapidly deteriorating outlook in nearly every area, particularly from lower-income consumers earning less than $50,000. The index posted its largest decline in over three years, dropping to just 98.7, far below the consensus forecast. For comparison, it was at 132.6 in February 2020, just before the pandemic. Consumers expressed the greatest concern about price increases. In addition, labor market conditions deteriorated for the seventh straight month, with the largest number of consumers reporting difficulty finding a job in over three years.
New Home Sales Dip, But Still Up Annually
After unexpectedly jumping to the highest level since February 2022 last month, sales of new homes in August fell 5% from July but were still 10% higher than a year ago. The median new-home price of $420,600 was down 5% from last year at this time. In contrast to existing home sales, which measure closings during the month, new home sales are based on contracts signed, so they are a leading indicator of future housing market activity.
Mortgage Rates for the week of 9-30-2024