“Sing with me, sing for the year, sing for the laughter, sing for the tear.” (Aerosmith) Home sales declined from May to June. The ongoing inventory shortages across much of the country may have potential buyers crooning a sad song.

Existing Home SalesExisting home sales declined for the third straight month in June, falling 0.6 percent from May to an annual rate of 5.38 million units, the National Association of REALTORS® reported. Declines in the West and South outpaced gains in the Northeast and Midwest. From June 2017 to June 2018, sales fell 2.2 percent. Inventory of homes for sale on the market was at a 4.3-month supply, well below the 6-month supply seen as normal.

Lawrence Yun, NAR chief economist, says, “The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and in many cases, has multiple offers.”

Sales of new homes also fell 5.3 percent from May to June to an annual rate of 631,000, below the 670,000 expected. This was their lowest level since October 2017. However, sales were up 2.4 percent from June of last year. New home sales surged in the Northeast, but declined in the West, Midwest and South. The ongoing hurdles of rising lumber costs and shortages of labor and land were partly to blame.

Economic growth surged in the second quarter of 2018 due in part to a big rise in consumer spending. The Bureau of Economic Analysis reported that Gross Domestic Product (GDP) rose 4.1 percent from the 2.2 percent recorded in the first quarter. The report also showed that consumer spending jumped 4 percent in the second quarter from the dismal 0.5 percent in the first quarter. GDP is the monetary value of all finished goods and services produced within a country’s borders in a specific time period. It is considered the broadest measure of economic activity.

Mortgage bonds were weighed down by the strong GDP report as well as the positive news that trade concessions with the EU were announced. Home loan rates remain near historic lows.

A full slate of economic reports plus a Fed meeting could be a recipe for volatility this week.

  • Look for housing news on Monday with Pending Home Sales and the S&P/Case-Shiller Home Price Index on Tuesday.
  • Also on Tuesday, Personal Consumption Expenditures, Personal Income, Personal Spending, the Employment Cost Index and Consumer Confidence will be released.
  • Manufacturing news will be delivered via the Chicago PMI on Tuesday and the ISM Index on Wednesday. The ISM Services Index follows on Friday.
  • The two-day FOMC meeting kicks off on Tuesday and ends Wednesday with the release of the monetary policy statement at 2:00 p.m. ET.
  • From the labor front, the ADP National Employment Report will be delivered on Wednesday, weekly Initial Jobless Claims on Thursday and the Jobs Report for July on Friday.

If you or someone you know has questions about home loan rates, please give me a call. I’m always happy to help.

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