From our mortgage broker, Cameron Lewis:
With just minor exceptions, all of the economic data released this week beat the consensus forecast, indicating that the economy is improving more quickly than expected. While current inflation levels remain low, faster economic growth generally leads to higher future inflation, which is negative for mortgage rates. As a result, mortgage rates ended the week higher.
Early in the week, stronger than expected manufacturing and housing data convinced economists to revise higher their forecasts for economic growth, and Friday’s Employment data supported the improved economic outlook. Against a consensus forecast for a loss of -300K jobs, the economy lost -247K jobs in July, and the May and June data was revised to
show fewer job losses as well. This was the 19th straight month of job declines, but it was the smallest level of losses since August 2008. The July Unemployment Rate fell to 9.4% from 9.5% in June, its first decline in 15 months. In addition, wages and the length of the average workweek increased. Overall, this report revealed unexpected improvement
in nearly every area.
This week’s housing market data also came in stronger than expected. June Pending Home Sales rose 4%, the fifth consecutive monthly increase. Pending Home Sales are a leading indicator for future housing market activity, meaning that Existing and New Home Sales reports may show improvement in coming months. According to the chief economist of the
National Association of Realtors (NAR), affordable home prices, low mortgage rates, and a rush to take advantage of the $8,000 first-time homebuyer tax credit have helped increase home sales.
Next week will be packed with major economic news. There will be a Fed meeting on Wednesday. No change in rates is expected, but the wording of the Fed’s statement will be very highly anticipated. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. Retail Sales will be released on Thursday, and Retail Sales account for about 70% of economic activity. Another important indicator of economic activity, Industrial Production, will be released on Friday. In addition, there will be large Treasury auctions on Tuesday, Wednesday, and Thursday.
Copyright @ 2009 MBSQuoteline
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Perhaps this kind of positive press will improve consumer confidence in time for the leaf
season here in Asheville!
