Mortgage rates increased for the fifth week in a row, climbing another three basis points last week according to the Freddie Mac Primary Mortgage Market Survey as of August 6th. While mortgage rates continue to influence affordability, the housing market is showing signs of adjustment, with listing prices modestly below year-ago levels and for-sale inventory improving from the limited supply seen in recent years.
Mortgage applications decreased 2.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 31st. “In the wake of the July FOMC meeting, longer-term rates increased, with mortgage rates reaching their highest level in more than a year, with the 30-year fixed mortgage rate rising to 6.81 percent,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Application volume for both refinance and purchase loans declined for the week, and are now running behind last year’s pace, indicating that higher mortgage rates have weakened overall demand.”
Consumer sentiment jumped 12% in July, with improvement occurring across all demographics, income, age and political affiliation, the University of Michigan said last Friday. The university’s consumer sentiment index rose from 49.5 in June to 55.2, although it remains 10.5% below where it was a year ago. The increase was driven by both how consumers view the current economic conditions as well as how they perceive the future. “Consumer sentiment confirmed its early-month reading, landing almost 12% above June,” Joanne Hsu, survey director, said in a statement. “Broad-based improvements were seen across all groups by income, education, wealth, age, and political party.”
The number of Americans filing claims for unemployment benefits increased slightly last week, while layoffs dropped to a two-year low in July, consistent with a stable labor market. The lack of labor market stress and contained wage pressures gave the Federal Reserve room to focus on the inflation fallout from the Middle East conflict, economists said. “A true productivity miracle that brings down some of the higher price costs borne by consumers and business and keeps overall inflation in check depends on whether the emerging advancements in AI technology truly enable workers to produce goods more cheaply and provide services at a lower cost over time,” said Christopher Rupkey, chief economist at FWDBONDS.
