Mortgage bond prices finished the week lower which put upward pressure on rates. We started the week on a positive note with weaker than expected data and tame inflation readings. Industrial production rose 0.4% vs 0.6% and capacity use was 76.4% vs 76.5%. Consumer prices rose 0.3% vs 0.4%. The core rose 0.1% vs 0.3%. Selling pressure emerged Wednesday afternoon and continued into the end of the week in response to stronger data. Retail sales were higher with an increase of 0.7% vs an expected 0.7% decline. Weekly jobless claims were 332K vs 330K. Philadelphia Fed came in at 30.7 vs 19.0. Consumer sentiment was 71 vs 70. The Fed continued their billion-dollar daily MBS purchases, but it only stemmed some of the selling pressure. Mortgage interest rates finished the week worse by approximately 1/8 to 1/4 of a discount point.


Economic IndicatorRelease Date & TimeConsensus EstimateAnalysis
NAHB Housing IndexMonday, Sept. 20,
10:00 am, et
75Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates.
Housing StartsTuesday, Sept. 21,
8:30 am, et
1.58MImportant. A measure of housing sector strength. Weakness may lead to lower rates.
Existing Home SalesWednesday, Sept. 22,
10:00 am, et
5.89MLow importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
Fed Meeting AdjournsWednesday, Sept. 22,
2:15 pm, et
345KImportant. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Weekly Jobless ClaimsThursday, Sept. 23,
8:30 am, et
335KImportant. An indication of employment. Higher claims may result in lower rates.
Leading Economic IndicatorsThursday, Sept. 23,
10:00 am, et
Up 0.6%Important. An indication of future economic activity. Weakness may lead to lower rates.
New Home SalesFriday, Sept. 24,
10:00 am, et
720KImportant. An indication of economic strength and credit demand. Weakness may lead to lower rates.

Housing Starts

Housing starts data is a leading indicator of the state of our economy. This report, provided by the Bureau of the Census, takes into account data from both single-family homes and multi-family dwellings. Building permits are also released with the housing starts data. By knowing the number of permits issued monthly, analysts can attempt to estimate for the upcoming months. Normally, starts are 10% higher than permits since all locations are not required to have a building permit.

Housing starts and permits give a warning of future economic activity. In effect, a rise in housing starts can lead to a fall in the bond market and vice versa. Consumers tend to hold off on the purchase of new homes, new cars, and other big-ticket items if they are worried about the future of the economy. Housing is an important part of our economy. Declines in housing starts can lead to economic slowdown. On the other hand, increases in housing starts can signal positives for the economy. From the opposite perspective, changes in interest rates often lead to changes in housing starts. Higher interest rates can cause a significant decline in home sales, which can lead to a drop in housing starts. Just the opposite happens when rates remain low. Low mortgage rates affect both home sales and housing starts.