Mortgage Rates Fall Slightly, Economic Data In Line With Expectations

Mortgage rates fell slightly last week.

Economic data releases last week were largely in line with expectations, with GDP declining slightly in the first quarter, price indicators showing continued inflation and jobless claims highlighting continued tightness in labor markets. New home sales declined for the third month in a row with ongoing for-sale supply constraints acting as one limiting factor. Still, new home sales remain higher than in the decade prior to the pandemic. While higher interest rates may lead to a slowdown in demand, there is plenty of demand from a decade of underbuilding to keep builders confident in continued new housing starts. Markets reacted positively today to the Federal Open Market Committee decision to raise the targeted Federal Funds rate by 0.5%, which was in line with expectations and removed the risk of a 0.75% increase.

Investors will be focused later this week on employment data and comments from Federal Reserve members following the May meeting.