After a wide array of economic releases, the impact saw retail sales fall short. Overall, there was no shortage of economic news this past week. The consumer spending report disappointed market analysts. However, investors felt encouraged by housing data.
Meanwhile, the second government stimulus package made progress. Plus, another Fed meeting took place. Ultimately, all of this information left a surprisingly little impact on mortgage markets. And rates remained near record-low levels.
Retail Sales Fall Short
Due to the pandemic, retail sales declined sharply in March and April. In the aftermath, consumer spending followed up with five impressive months of gains to reach record high levels.
However, rising coronavirus case counts halted momentum yet again. This is during the holiday season, no less. In November, the data saw retail sales fall short, dropping 1.1% from October. This result came in far weaker than expected. Meanwhile, the October results were revised lower.
Lack of Housing Inventory
The consistent lack of housing inventory is one of the primary obstacles to the real estate market. This is in spite of the amazing performance in the housing sector. Right now, the number of homes for sale is at just a 2.5-month supply nationally. This falls well below the 6.0-month supply, a healthy balance between buyers and sellers.
However, the latest report on housing starts contained encouraging news. In November, single-family housing starts were 22% higher than a year ago. This is the best level since 2007.
Fed Meeting Update
Wednesday’s Fed meeting caused little change in the investor outlook for future policy. Thus, the reaction in financial markets was minor.
The post-meeting statement added additional details regarding the Fed’s plan for its massive asset purchase program.
Board of Governors of the Federal Reserve System
Looking Ahead After Retail Sales Fall Short
Looking ahead, investors will continue watching COVID-19 case counts. This is in addition to the vaccine distribution and negotiations for additional government stimulus.
Beyond that, Existing Home Sales releases on Tuesday. New Home Sales and the Core PCE come out on Wednesday.
Mortgage markets close early on Thursday. They also close on Friday for Christmas.
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