Mortgage Market Update
This week brings us the release of only three pieces of monthly economic data that may affect mortgage rates and none of them are considered to be highly important. This should be a much calmer week for mortgage rates than last week was, particularly the first couple days since there is nothing of importance scheduled for tomorrow or Tuesday. The first of this week's economic reports comes late Wednesday morning when the National Association of Realtors posts May's Existing Home Sales. This report tracks resales of existing homes, giving us a measurement of housing sector strength. It is considered to be moderately important to the markets, but can influence mortgage rates if it shows a sizable difference between forecasts and actual results. Analysts are currently expecting to see a small decline in sales, pointing towards a softening housing sector. That would be good news for the bond market and mortgage rates. A weaker housing sector makes overall economic growth more difficult, so a sizable decline would be ideal for the bond market and mortgage shoppers. May's Leading Economic Indicators (LEI) will be posted late Thursday morning. The Conference Board, who is a New York-based business research group, produces this report. The LEI attempts to predict economic activity over the next three to six months. Good news for mortgage rates would be a decline in this index, but it is expected to show a 0.3% increase from April's reading. This means it is predicting a minor increase in economic growth over the next several months. Since this report is not considered to be of high importance, I don't see it causing too much movement in rates regardless if it shows a particularly strong or weak reading. Thursday has May's New Home Sales report at 10:00 AM ET. It helps us measure housing sector strength by tracking sales of newly constructed homes. This report is similar to Wednesday's Existing Home Sales report, but covers a much smaller portion of sales than that report does. It is expected to show a rise in sales, but will likely not have much of an impact on mortgage rates because this data gives such a small snapshot of the housing sector. I believe it will take a large rise in sales or a sizable decline for this data to influence mortgage rates. Overall, it is difficult to label any particular day as the most important due to such a light calendar this week. We still should see movement in rates more than one day, although I am not expecting them to make a big move. It would be prudent to keep an eye on the markets even though there is little happening this week because the markets can get active without notice.