This week brings us the release of only three pieces of economic data that are likely to affect mortgage rates. None are considered to be highly important to the markets though and all of the data will come over two days. There is nothing of importance set for tomorrow, so expect stock movement to be the biggest influence on tomorrow’s bond trading and mortgage pricing.
September’s Housing Starts will start the week’s activities at 8:30 AM ET Tuesday. This Commerce Department report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show an increase in new home starts between August and September. I believe we need to see a significant surprise in this data for it to have an impact on Tuesday’s mortgage rates.
Both of the other relevant monthly reports will be released late Thursday morning. The National Association of Realtors will post September’s Existing Home Sales data at 10:00 AM ET Thursday. This report gives us an indication of housing sector strength and mortgage credit demand by tracking home resales in the U.S. I don’t see it having much of an influence on the bond market or mortgage rates, but a reading that varies greatly from analysts’ forecasts could lead to a slight change in mortgage pricing. It is expected to show a small increase in sales from August to September, meaning the housing sector strengthened slightly. That would be bad news for the bond market since a strengthening housing sector makes broader economic growth more likely and bonds less appealing to investors.
September’s Leading Economic Indicators (LEI) will be released by the Conference Board at 10:00 AM ET Thursday morning. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for a decline of 0.1% from August’s reading. This would indicate that economic activity is likely to remain fairly flat over the next couple of months. That would be relatively favorable news for the bond market and mortgage rates, but this report is considered to be only moderately important. Therefore, a small increase or decline would not be of much concern to the bond and mortgage markets. Ideally, we would like to see a sizable decline though.
Overall, Thursday has the most important report of the week but that is not exactly saying much. Unless the Existing Home Sales report shows some significantly strong or weak results, it should only have a minor impact on this week’s rates. The calmest day will likely be Wednesday or Friday. However, unexpected geopolitical or financial news can significantly influence bond pricing and mortgage rates at any time as can a sizable move in stocks. Therefore, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate.