Overview: During an otherwise quiet week, unexpected political events were modestly positive for mortgage rates. Strong housing data had little impact, and rates ended the week a bit lower.
On Tuesday, House Democrats initiated an impeachment inquiry into President Trump over alleged abuses of power. While analysts generally think that it is unlikely that the Republican-controlled Senate would ever convict President Trump, the inquiry might distract attention and hinder the passage of new legislative initiatives. The resulting uncertainty caused a small shift by investors to safer assets, which was good for mortgage rates.
The housing data released over the past week was encouraging, as lower mortgage rates have supported increased sales activity. In August, sales of previously owned homes, which make up roughly 90% of the market, increased more than expected from July to the highest level since March 2018. The national median existing-home price was up 5% from a year ago. On the downside, inventory levels nationally were only at a 4.1-month supply and were 3% lower than a year ago.
The news on sales of new homes, which account for the remaining 10% of the market, also surpassed expectations in August. New home sales jumped 7% from July to the second-best reading since 2007. Combined with last week’s strong report on home construction, the recent data has provided numerous reasons to be optimistic about future sales activity.