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    Market Analysis Week of 11-22-2021

    Rising Covid case counts, particularly in Europe, outweighed stronger than expected consumer spending data last week, and mortgage rates ended a little lower.

    Austria Heads into Lockdown

    To help reduce the spread of Covid, Austria announced last Friday that it will impose a national lockdown again beginning on Monday. This raised investor concerns about slower global economic growth, which would reduce future inflationary pressures and thus was positive for mortgage rates. The question is whether other countries will take similar measures.

    Consumer Spending Up 16% YOY

    Since consumer spending accounts for over two-thirds of U.S. economic activity, the retail sales data is a key indicator of growth. In October, retail sales jumped 1.7% from September, which was above the consensus forecast and an impressive 16% higher
    than a year ago. Particular strength was seen in sales of electronics and appliances. Despite shortages of many products, consumers have shown few signs of slowing their spending any time soon.

    New Housing Inventory Falls Short of Expectations

    With the ongoing severe need for a larger inventory of homes for sale in many regions, the monthly report on housing starts has gained in importance, and the latest results were mixed. In October, overall housing starts fell short of expectations with a modest decline from September. Single-family starts fell 4% from the prior month to the lowest level since August 2020, while multi-family starts rose 7%.

    On a brighter note, building permits, a leading indicator posted solid gains for both single-family and multi-family units. Rising prices and shortages for materials, land, and skilled labor continued to present challenges to builders.

    Major Economic News Due This Week

    Looking ahead, investors will be seeking hints from Fed officials about the timing for future rate hikes and will closely watch Covid case counts around the world. Beyond that, Existing Home Sales will be released today and New Home Sales on Wednesday. The core PCE price index, the inflation indicator favored by the Fed, also will come out on Wednesday. Mortgage markets will be closed on Thursday and will close early at 2:00 p.m. est on Friday for Thanksgiving.

     

    mortgage rates week of 11-22-2021

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