The Fed's favorite inflation gauge, the Core Personal Consumption Expenditures (PCE) was unchanged year-over-year at 1.9% this morning as inflation remains in check. The Fed has forecasted that the Core PCE will stay close to current levels for three years out, which should hold interest rates relatively low. Within the report it showed that Personal Incomes fell for the first time in three years in January while Personal Spending declined 0.5%, the biggest drop since September 2009.
Freddie Mac reports that the mortgage market is expected to see modest growth in 2019 buoyed by lower mortgage rates. Rates should stay relatively low in 2019 averaging 4.6% before rising to 4.9% in 2020. Total housing starts are expected to increase to 1.29 million units in 2019 and 1.36 million in 2020 while total home sales should increase to 6.10 million this year and 6.12 next year. Freddie is forecasting U.S. GDP growth at 2.5% in 2019 and 1.8% in 2020. Lastly, single-family mortgage originations are expected to increase 2.1% percent to $1.68 trillion in 2019 and remain at a similar volume in 2020.
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