This week, the real estate market faced mixed new home sales data. Meanwhile, the trade tensions between the U.S. and China left a positive effect for mortgage rates. Also, the trade tensions negatively impacted stocks.
However, the economic data and Fed minutes created little impact. As a result, mortgage rates declined a bit. Thus, mortgage rates, ended the week at their lowest levels in over a year.
Real Estate Market Faces Mixed New Home Sales Data
As the real estate market faces mixed new home sales data, existing home sales unexpectedly posted a small decline in April. Also, existing home sales fell 4% lower than a year ago.
On the other hand, sales of new homes in April neared the consensus forecast. However, real estate experts revised the March results upward to the highest level since October 2007.
New home sales represent signed contracts. Meanwhile, existing home sales reflect actual closings. Therefore, analysts see the new home sales report as a more forward-looking indicator of housing market activity.
Trade Tensions & Fed Meeting
As the real estate market faces mixed results, the U.S. and China took a couple of steps backward in the trade negotiations. This increased the likelihood of both countries imposing tariffs and other penalties on foreign firms. Since barriers to trade of this nature slow global economic activity, these developments reflected favorably for mortgage rates and poorly for the stock market.
Beyond that, the May 1st Fed meeting minutes came out on Wednesday. Showing no surprises, Fed officials retain a patient approach to adjusting rates “for some time”. Also, the Fed watches inflation to see if the current low levels are mostly due to temporary factors or longer-term trends. Investors debate whether economic conditions will cause the Fed to cut rates later this year.
Looking Ahead After Real Estate Market Faces Mixed News
After the real estate market faced mixed news, investors look ahead to a light week. Pending Home Sales and the second estimate of first quarter GDP release on Thursday. The core PCE price index, the inflation indicator favored by the Fed, comes out on Friday.
In addition, news about the status of the trade negotiations between the U.S. and China hold potential influence over mortgage rates. Mortgage markets close on Monday in observance of Memorial Day.
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