|
Geopolitical events related to Italy and North Korea were the primary influences on mortgage rates this week. The U.S. economic data mostly came in on target and caused
little reaction. Mortgage rates declined from the seven-year highs reached last week.
|
Italy formed a new government early this week, and the political parties in control of the coalition have changed significantly. The new leaders have shown little support for remaining in the European Union (EU). This does not mean that Italy will ultimately exit the EU, but the risk has certainly increased. On Friday, President Trump canceled the planned historic U.S. summit with North Korea. The uncertainty about the future of the EU and the relations with North Korea created by these events caused investors to shift to safer assets, including U.S. mortgage-backed securities (MBS). This additional demand for MBS helped push mortgage rates lower.
|
The housing data released this week revealed that sales of both new and previously owned homes have held relatively steady each month so far this year. In April, sales of previously owned homes fell a bit from March, but they were close to the level seen a year ago. Sales of newly built homes also fell a little from March, but they were 11.6% higher than a year ago.
|
|
The difference in annual performance was mainly due to the supply of homes on the market. The inventory of previously owned homes was at just a 4.0-month supply, 6.3% lower than a year ago. The inventory of new homes was at a much healthier 5.4-month supply, 12.4% higher than a year ago.
|
Looking ahead, the important monthly Employment report will be released on Friday. As usual, these figures on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the Core PCE price index, the inflation indicator favored by the Fed, will be released on Thursday. The ISM national manufacturing index will come out on Friday. Mortgage markets will close early on Friday in observance of Memorial Day.
|
All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.
|
|
|
|