Posted On March 27, 2017
Mortgage rates trended downward last week. When the Federal Reserve raises the short-term interest rate, long-term rates like mortgage rates may not react immediately. This week, there will be the S&P Case-Shiller home price index, the pending home sales report, and the consumer spending, personal income, and core inflation report.
The S&P Case-Shiller home price index tracks changes in the value of homes in 20 major metropolitan regions across the United States. Last week, the Federal Housing Finance Agency (FHFA) home price index showed no change in home value from December to January. However, the FHFA index only accounts for homes that are financed through conventional mortgages backed by Fannie Mae and Freddie Mac. The Case-Shiller index accounts for a larger sample of homes.
The National Association of Realtors (NAR) pending home sales report started the year off with a decline, attributed to rising mortgage rates and a low supply of available homes. NAR chief economist, Lawrence Yun, explained that buyer traffic is outpacing seller traffic in many regions, and homes are selling at a much faster rate than just a year ago.
Personal income and consumer spending account for the core inflation report. Personal income represents the total income a household takes in from all sources including wages and investments. Consumer spending is the total spending on goods and services. Consumer spending accounts for two-thirds of Gross Domestic Product (GDP) activity, so the consumer spending report is an important indicator of the economic temperature.
Spring and summer tend to be the busier for the housing market than the winter months. Even if rates were to tick back upward, they remain historically low.