Quiet Week

The biggest economic release this week showed that inflation was in line with expectations, and the other data also had little impact on mortgage markets. As a result, rates ended the week nearly unchanged.

Gross Domestic Product (GDP) is the broadest measure of economic activity. During the second quarter of 2024, U.S. GDP rose at an annualized rate of 2.8%, well above the consensus forecast of 2.0% and up from 1.4% during the first quarter. Strength was seen in consumer spending, government spending, and nonresidential investment. After letting inventories draw down during the first quarter, companies built them back up during the second quarter, also adding significantly to the overall growth rate. The inflation component of the report was lower than expected, offsetting the negative impact for mortgage markets of faster growth.

In the housing sector, sales of existing homes in June fell 5% from May to the lowest level since December. The median existing-home price of $426,900 was up 4% from last year at this time, at a record high. However, part of this increase was due to a shift in sales to more expensive homes relative to ones at the lower end of the market. Inventory levels remain stuck near historic lows, standing at just a 4.1-month supply nationally, far below the 6-month supply typical in a balanced market. Looking at these figures from a different perspective, though, inventories were 23% higher than a year ago.

The Fed meeting will take place on Wednesday. No change in rates is expected, but investors anticipate that officials will signal that a rate cut is likely at the next meeting in September. For economic reports, the ISM national manufacturing index will come out on Thursday. The key Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation will be some of the most highly anticipated economic data of the month.