Welcome news arrived last week as lower mortgage rates decreased slightly.
The Federal Reserve released its Beige Book Report released last Tuesday indicated modest economic growth throughout the 12 Federal Reserve districts. Analysts predicted that this would cause the Fed to further reduce the volume of monthly asset purchases made under its quantitative easing program.
The Atlanta, Cleveland and Kansas City districts reported slower home sales, which supported recent expectations of slowing gains in home prices.
Mortgage Rates Dip, Housing Starts Up
Following a worse than expected government jobs report, mortgage rates declined last week erasing the increase we experienced a couple of weeks ago.
The National Association of Home Builders/Wells Fargo Home Builders Confidence Index dropped slightly in January. Although expectations were for a reading of 59, January’s reading was 56 and lower than December’s revised reading of 57.
The NAHB Index has increased by 19 percent year-over-year and is expected to continue rising in 2014 due to relatively lower mortgage rates, and pent-up demand for homes.
Housing starts for December came in at 999,000 against expectations of 985,000 and November’s revised reading of 1.11 million. Cold weather and concerns over rising mortgage rates in 2014 were cited as causing fewer housing starts. As the Fed tapers its QE program, mortgage rates are expected to rise.
Consumer sentiment toward the economy was lower than expected according to the University of Michigan Consumer Sentiment Index for January. The confidence index was expected to rise to 84.0 based on December’s reading of 82.5, but only achieved a reading of 80.4.
Higher gasoline prices and a slower labor market likely contributed to wavering consumer sentiment; rising inflationary expectations were also considered a cause.
Mortgage Rates This Week
This week is a light week of economic releases that impact mortgage rates. With the bond market closed yesterday for the Martin Luther King Jr. holiday, Thursday is the only day with any meaningful economic releases. All eyes this week will be on Davos, Switzerland for the World Economic Forum. We will have many speeches by major economists and central bank presidents. This is usually not a market mover; however, this is the only thing going on this week for traders to pay attention to.
What’s on the agenda for this week?
To see our last “This Week’s Mortgage Rates” post and check out the current trends click here. For more news on Washington state mortgage rates and national rates check out our Market News page!