Pending Home Sales and Retail Sales Go Higher

Mortgage rates held relatively steady last week as the U.S.-Iran war continued to push oil prices higher. Retail sales surged on the back of record gas prices, pending home sales ticked up modestly, and buyers in markets where prices have come down are starting to take advantage of the opportunity. Powell takes the stage Wednesday for his final press conference as Fed Chair, and what he says about inflation, tariffs, and the path forward for rates will set the tone for the mortgage market heading into the summer before the new Fed Chair takes the reigns.

The average rate on a 30-year fixed rate conventional loan ticked up slightly to 6.24%, up from 6.18%. See what rates we're offering by signing up for our Friday rate texts. 

Our LendFriend Learning Center now has over 250 articles to help homebuyers buy with confidence. Check out our top articles of the week at the bottom of this email.

Retail Sales Surge Thanks to Gas Prices

Retail sales jumped 1.7% in March, well above the 1.4% economists expected, and on the surface, that's bad news for mortgage rates and inflation. Hotter than expected retail sales fuel inflation concerns, which pushes the Fed to keep rates higher for longer.


But if you look beyond the headline number, there's a silver lining. Nearly all of that gain came from a record 15.5% surge at gas stations, driven by the U.S. war with Iran sending oil prices up more than 30%. That matters because gas prices could be temporary if the conflict de-escalates and prices at the pump come back down, retail sales would naturally cool with them, taking some of that inflation pressure off and giving the Fed more room to cut.

Pending Home Sales Are Higher

Pending home sales rose just 1.5% in March despite elevated mortgage rates (relative to February), which is actually good news for buyers. A sluggish market means less competition, more negotiating power, and sellers who are increasingly motivated to make deals happen. Many markets are experiencing a more active market because either prices have come down or inventory is still tight, coupled with mortgage rates that, while elevated month over month, are at multi-year lows.

Austin is a great example of what happens when prices come down. Pending sales there are up 15.4% year over year, which tells you buyers are absolutely paying attention and jumping on the opportunity. Prices are lower and since homes are taking longer to sell, sellers are coming off their list price more than they were a year ago. That's the window right now. Prices have already dropped enough to bring buyers back in, but if that trend continues, competition will build and the leverage buyers have today won't last.

What to expect this week?

This week is one of the most important we've seen in a while for mortgage rates.This week is one of the most important we've seen in a while for mortgage rates. Wednesday's Fed meeting is front and center, and while analysts say there's a 100% certainty of no rate move, all eyes will be on Powell's press conference at 2:30pm ET — his last as Fed Chair. Markets will be analyzing every word for clues on how the Fed is thinking about inflation (especially as oil prices stay high), tariffs, labor data and the timing of future cuts.

Tuesday kicks things off with the S&P Case-Shiller home price index and consumer confidence.

Wednesday is the big day. Beyond the Fed decision, we'll get durable goods orders, housing starts, and building permits — all of which paint a picture of where the economy is heading heading into the Fed's deliberations.

Thursday is arguably the most data-heavy day of the week. GDP for Q1 comes in with expectations of just 0.5% growth, a sharp slowdown from last quarter. PCE inflation, the Fed's preferred gauge, is expected to tick higher on both a monthly and annual basis. Jobless claims and the employment cost index round out what will be a very busy morning for rates.

Friday wraps up with manufacturing PMI data, which has been holding above 50 — the dividing line between expansion and contraction — and will give a final read on economic momentum heading into May.