Mortgage rates continued their climb higher last week as markets dealt with contradictory data about the health of the housing and the economy.
New Home Sales registered its biggest gain in 14 years while Existing Home Sales reached a 4-year low; and purchases of “big-ticket” items such as computers, appliances and furniture unexpectedly jumped while the inventory of homes for sale rose to 8.4 months.
It’s enough to confuse even the most experienced investor.
As a result of the data, traders postponed their expectation for a Fed Funds Rate decrease and that helped push mortgage rates higher on the whole.
This week should provide little relief from mortgage rate volatility.
Tuesday’s Consumer Confidence will reveal how consumers are feeling in the face of record-high gas prices and Wednesday’s FOMC Minutes will unmask the inner discussions of the Fed’s meeting earlier this month. Both can have a moderate impact on mortgage rates.
Friday, however, is the big day — we’ll get three major reports:
- Personal Consumption Expenditures: The Fed’s preferred inflation gauge
- Personal Income and Outlays : A look at American savings and spending habits
- Non-Farm Payrolls: May’s jobs report, including unemployment
All three releases on the same day, and into a nervous market, give this the potential for an Economic Perfect Storm. Expect extreme rate volatility heading into, and through, Friday.