REAL ECONOMY BLOG | May 23, 2024
New home sales fell below estimates in April as mortgage rates surged to above 7%. The data, released by the Census Bureau on Thursday, pointed to a disappointing month for housing sales, following the drop in April’s existing home sales released on Wednesday.
The rebound in inflation in the first quarter was the key factor. Mortgage rates, especially the 30-year rate, moved in tandem with other long-term yields when inflation had suggested a more hawkish stance from the Federal Reserve.
But mortgage rates have dipped since the start of May when the Fed appeared to be less hawkish.
Whether that will remain the case in the second half of May is less clear after the release on Wednesday of the Federal Open Market Committee’s minutes, which showed a Fed that was less certain about how restrictive rates were.
So far, the 30-year yield has remained below April’s high, implying a more encouraging month for home sales.
In a separate report on Thursday, new jobless claims dropped by 8,000 to 215,000 last week, continuing to point to a healthy labor market where layoffs are still under control.
Still, looking at the longer-term trend, new claims have been on a small uptrend since January, suggesting a gradual cooling of the labor market.
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This article was written by Tuan Nguyen and originally appeared on 2024-05-23. Reprinted with permission from RSM US LLP.
© 2024 RSM US LLP. All rights reserved. https://realeconomy.rsmus.com/u-s-new-home-sales-miss-forecasts-amid-rising-mortgage-rates/
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