Last week, President Trump was unable to gather enough votes to pass the health care bill and the vote was canceled late Friday afternoon. This increased investor concerns about Trump’s ability to deliver his business-friendly policy changes in other areas. Policies which stimulate growth are good for the economy, but they raise the outlook for future inflation. Investors had pushed mortgage rates higher in anticipation of his policy changes. As a result, reduced expectations were good for mortgage rates.
Tuesday’s report on Consumer Confidence from the Conference Board showed an enormous increase to the highest level in a decade. Solid gains were seen in optimism about both present and future economic conditions. Higher confidence levels generally lead to increased future economic activity, so this data was broadly applauded, but it was not good for mortgage rates.
Encouraging news in the housing sector continued this week. In February, the Pending Home Sales index rose 5.5% from January to the second-best level in a decade. There are two reports each month which measure sales of previously owned homes. The report on sales of existing homes measures closings during the month, while pending sales measure contracts signed, making the Pending Home Sales data a leading indicator of future closings.
Looking ahead, the important monthly Employment report will be released on Friday. As usual, this data on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, the ISM national manufacturing index and Construction Spending will be released on Monday. The ADP Employment Change and the ISM national services index will come out on Wednesday.
Vice President of Mortgage Lending
NMLS ID # 399335
Phone: (415) 549-8757
Cell: (415) 306-4466