Mortgage Rates Unchanged
During a relatively light week for economic data, investors were focused on a big inflation report released last Friday. The results were right in line with expectations, and mortgage rates ended last week with little change.
Fed’s Preferred Inflation Gauge
Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator. In July, Core PCE was 2.9% higher than a year ago, up from an annual rate of increase of 2.8% last month and the highest level since February. Progress toward the 2.0% target of the Fed has not been easy, and this desired level has not been achieved since February 2021. The big question remains how large an impact higher tariffs will have on future inflation levels.
Strong New Home Sales
Like the existing home sales data released last week, sales of new homes displayed solid performance in July, exceeding the consensus forecast. However, they still were 8% lower than a year ago. The median new-home price of $403,800 was down 6% from last year at this time. In contrast to existing homes, the supply of new homes remains near the highest level since 2009. Existing home sales measure actual closing during the month, while new home sales are based on contracts signed, making them a leading indicator of future housing market activity.
Weekly Jobless Claims Stable
The Department of Labor releases the total number of new claims for unemployment insurance each week. The latest reading was just 229,000, very close to the consensus forecast. Bigger picture, this was far below the inflated figures seen during the early months of the pandemic, and in line with the levels which were typical during 2019. Weekly jobless claims are important because they are one of the timeliest indicators of labor market trends. While other recent economic reports suggest that companies may be scaling back on hiring new employees, this report indicates that they remain reluctant to lay off workers.
Mortgage Rates for the week of 9-01-2025