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Stronger than expected economic data was negative for mortgage rates this week. The passage of the potentially inflationary tax bill in the House and the Senate also was unfavorable. As a result, mortgage rates ended the week higher.
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The housing market is ending 2017 on a strong note. In November, sales of previously owned homes rose 6% from October to the highest level since 2006. Single-family housing starts and single-family building permits also reached the best levels in over a decade. The confidence index from the National Association of Home Builders posted even more impressive results with the highest reading since 1999.
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However, the strong data also raised the outlook for future inflation, which was negative for mortgage rates.
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While not ideal for the housing industry, the tax bill passed by Congress this week is an improvement from earlier versions. The bill does not restrict the mortgage interest deduction as much as earlier proposals, and a proposed change requiring more people to report gains on the sale of their residences was dropped. In addition, one version of the Senate tax bill eliminated the property tax deduction completely, but the final bill allows a deduction of up to $10,000 under certain circumstances.
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Looking ahead, the Core PCE price index, the inflation indicator favored by the Fed, Durable Orders, and New Home Sales will come out on Friday. After that, Pending Home Sales and Consumer Confidence will be released on Wednesday. Late in December,
light trading volume can lead to greater than usual volatility unconnected to any news. Mortgage markets will close early at 2:00 et on Friday and will be closed on Monday in observance of Christmas.
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All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.
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All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.
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