What’s Ahead For Mortgage Rates This Week – October 23, 2023

This week featured the usual retail sales report which shows consumer demand and as well as an indicator of the velocity of money, not only for consumers but business to business as well. An increase would show an increase in national and local increase in economic activity, which is important as we move into Q4 of the year; where the holiday season is expected to see an increase in consumer activity.

Retail Sales

Retail sales have exceeded expectations this month showing month-to-month increases across the board:

• Retail sales are up 0.7% from the previous month with an expected increase of 0.3%.
• Retail sales with auto removed show an increase of 0.6% compared to an expected 0.2% increase.
• Business inventories are also above the expected increase at 0.4% compared to 0.3%.

Housing Starts & Building Permits

U.S. Housing Starts rebound in September after a sharp drop in the prior month. Largely, economists are feeling that builders have been losing confidence since rates have peaked over 7% and housing is expected to trend lower until the end of the year.

• Construction of new U.S. homes rebounded 7% in September to an annual pace of 1.36 million units after a sharp 1.5% drop in the prior month, the Commerce Department said Wednesday.
• Building permits, a sign of future construction, fell 4.4% to a 1.47 million rate.
• Existing home sales beat expected sales with 3.98 million sales compared to the expected 3.90 million sales.

Key point: The pace of construction for single-family homes in September has risen by 3.2% and apartment building construction rose by 17.1%

Mortgage Applications Increased for the Month of October

MBA Mortgage Applications Increase, a measure of mortgage loan application volume again.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates seeing a week-to-week increase by 0.03% with the rates now at 92%.
• 30-Yr FRM rates seeing a week-to-week increase by 0.06% with the current rate at 63%

MND Rate Index

• 30-Yr FHA rates increased week to week seeing a 0.28% basis point increase. Current rates at 40%
• 30-Yr VA rates increased week to week seeing a 0.30% basis point increase. Current rates at 44%

Job Claims

Those who applied for unemployment benefits last week fell to a nine-month low of 188,000, subverting expectations that layoffs would rise as the U.S. interest rates continued to increase.

Initial Claims were 188,000 compared to the expected claims of 211,000. The prior month was 211,000.

What’s Ahead

This week’s scheduled economic reports include PMI data, along with new home sales. There will also be a national GDP data release which can give an indication of the growth of markets and economy as a whole. Lastly, Personal Income and Spending will be at the tail of the week along with PCE Index numbers.