Last week’s economic reports included minutes of the Fed’s Federal Open Market Committee meeting held in September along with releases on inflation and weekly reports on mortgage rates and new jobless claims.
FOMC Meeting Minutes Indicate December Rate Hike is No Sure Thing
According to minutes for the September 19 and 20 meeting of the Federal Reserve’s Federal Open Market Committee, the Fed has adopted a wait-and-see posture concerning a possible rate hike at December’s meeting. Although analysts previously indicated that additional rate hikes were expected by the end of 2017, the Fed chose not to raise the federal funds rate in September.
Hurricanes Harvey and Irma Impact Industrial Production
Hurricane damage was expected to slow industrial production in the short term. The impact of hurricane damage in Texas and Fl0rdia are expected to be short term, but the full impact of the two hurricanes had not been fully assessed at the time of the FOMC meeting.
Labor and real GDP readings rose, but the year-over-year reading for inflation was lower than the two percent inflation rate set by the Fed as a positive economic indicator. The Fed’s dual mandate also includes achieving maximum employment as measured by the national unemployment rate. The Fed originally set a goal of 6.50 percent unemployment in the immediate aftermath of the recession, but the national unemployment rate has exceeded expectations and currently hovers near 4.30 percent. Strong labor markets help propel renters into housing markets as they have more confidence in maintaining long-term employment.
Mortgage Rates, New Jobless Claims
Mortgage rates rose last week. Freddie Mac reported an average rate of 3.91 percent, which was six basis points higher than for the previous week. Rates for a fifteen-year fixed rate mortgage also rose by six basis points to 3.21 percent. The average rate for a 5/1 adjustable rate mortgage dipped two basis points to 3.16 percent. Discount points averaged 0.50 percent for fixed rates and 0.40 percent for a 5/1 adjustable rate mortgage.
New jobless claims fell to 243,000 as compared to expectations of 258,000 claims and the prior week’s reading of 260,000 first-time jobless claims filed.
This week’s scheduled economic readings include the National Association of Home Builders Housing Market Index, Commerce Department reports on housing starts and building permits issued. Weekly readings on mortgage rates and new unemployment claims will also be released. If you’re interested in buying a new home, please be sure to reach out to your local Mason Mac loan officer today.