Despite an increase in geopolitical tension, it was a quiet week for mortgage rates. The major recent economic data contained few surprises. Mortgage rates ended the week slightly lower.
The recent major economic data met or exceeded expectations nearly across the board, keeping the outlook for a likely Fed rate hike on December 16 on track. Third quarter Gross Domestic Product (GDP), the broadest measure of economic growth, was revised higher at 2.1% from 1.5%. Durable orders, another important indicator of economic activity, picked up strongly in October. Personal income showed solid growth in October as well.
The recent housing data came in very close to the expected levels. October existing home sales declined a little from September, but remained near the best levels of the year, and were 4% higher than a year ago. The inventory of existing homes for sale declined. October new home sales surged 11% from September, and the inventory increased to the highest level since early 2010. Since new home sales measure contracts signed, while existing sales measure closings, new home sales better reflect current activity.
Looking ahead, the report on pending home sales will be released on November 30. The ISM national manufacturing index will come out on December 1. The next Employment report will be released on December 4. Events outside the U.S. could influence mortgage rates as well. An escalation in the recent violence could cause investors to shift to safer assets. The European Central Bank meeting on December 3 also could have an impact on bond yields around the world.