A calm week of housing market reporting led to rates staying flat - which is a good thing. 

After weeks of rates falling on positive data, the market was able to take a deep breath, consolidate and get ready to react to future reporting - especially this week with the PCE Index coming out on Friday.  

However, a calm week for the housing market doesn't mean a calm week for news as both the Republican Party and Democratic Party made headlines (some discussing the cost of housing).

The average rate on a 30-year fixed rate conventional loan fell to 6.78% (slightly up from the 6.76% reported last week). 

 

Make sure you're signed up for our weekly Friday rate texts. It could make a HUGE difference in your homebuying decision. 

Retail Sales Surprise

One of the biggest indicators I've noticed of future inflation reports is retail sales data. The more that consumers spend, the worse the inflations reports have been. Unfortunately, June retail sales came in better than expected (unchanged month over month instead of falling .3% as expected).  We know the consumer is hurting. 2 weeks ago, the CEO of PepsiCo said lower-income consumers were "stretched" and "strategizing a lot to make their budgets get to the end of the month."

But, that's not showing up in the data as much as I hoped. Online shopping was up nearly 2% for the month and with Prime Day taking place last week, I wonder what the data will show for July retail sales.

Still, no change in retail sales data isn't overwhelmingly positive - so we may still be on track to see CPI fall again next month.

Housing Starts and Building Permits Get a Boost

As rates come down, we typically see developers start new construction projects, and that trend continued last week.  The US Census Bureau reported that housing starts increased to 1,353,000 in June (3% above May reporting and 4.4% below June 2023 reporting).

I continue to be a firm believer that the only way that we'll see home prices start to trend down is if we see millions of new construction homes flood the market, so while a small boost month over month is nice to see, we need to see home starts increase much more dramatically.

Jobless Claims Keep Going Higher

Another bad jobless claims report (bad for the economy that is / good for interest rates). New data from the Department of Labor showed 243,000 initial jobless claims were filed in the week ending July 13, up from 222,000 the week prior and above the 229,000 economists had expected! 

Even worse, continuing jobless claims continue to head higher as well (currently at 1.867M), meaning more people can't get back into the workforce - the numbers are as bad as they were in November 2021 - which was at the tail end of the pandemic workforce issues. The higher this number goes, the more likely the Fed will be forced to cut rates to fulfill its "dual mandate".

 Biden Drops out of the Presidential Race - It's Joever

Sunday afternoon, President Biden announced on X that he was dropping out of the 2024 presidential race. News outlets are coining the phrase "It's Joever" in response to Biden dropping out. Biden endorsed Kamala Harris to become the Democratic nominee. Biden is expected to address the nation at some point this week regarding his decision to drop out and we'll see how that impacts markets.

As of this newsletter, mortgage rates remain stable as Vegas (and investors) believe that no matter who the Democratic nominee is, Donald Trump will win the 2024 election.

RATE CUT WATCH:

A quiet week is better than a bad week and because of that, there's a 96% chance of seeing a rate cut on September 18th.

This week has A LOT of housing market data coming out AND the Fed's favorite inflation metric - the PCE index - is going to be released on Friday. This week could cause some volatility in interest rates and I hope things continue to go our way!