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Orders for cars, appliances and other durable goods increased in June, signaling strength in the economy even as manufacturers face parts and labor shortages.

The Fed kept policy rates and asset purchases unchanged at this month's FOMC meeting and repeated language that rising inflation reflected "transitory factors."

Widespread business re-openings helped the 2nd qtr GDP grow at a 6.5% annual rate, even higher than earlier in the year. The economy's size now exceeds its pre-pandemic level.

New home sales dropped to a 14-month low in June, suggesting the housing market is losing momentum amid soaring prices and an acute shortage of properties.

National home prices in May were up 16.6% over a year ago, the highest reported by CoreLogic Case-Shiller in 30+ years, as strong demand slammed up against weak supply.

Low inventory caused pending home sales to drop in June, down 1.9% annually. However, Realtor.com reports the number of newly listed homes in June rose 5.5% year over year.

 

 

 


 

Fed Chair Powell's semiannual testimony before Congress this week was good for mortgage rates. Powell said Fed bond purchases would continue while the economy recovers.

Inflation climbed higher than expected in June. Consumer prices rose 5.4% year over year and saw the biggest monthly gain since August 2008. Inflation is still being seen as transitory.

Jobless claims fell to a pandemic low last week, as the labor market continued to improve. More than half of U.S. governors have announced plans to end enhanced benefits early.

Treasury Secretary Janet Yellen and Fed Chair Jerome Powell are slated to discuss the potential risks of the hot housing market at a meeting with fellow regulators on Friday.

In his testimony before Congress, Powell said demand has pushed housing prices up and, even if mortgage rates rise, continuing demand is expected to keep prices stable.

Last week's purchase mortgage applications rose 8% over the previous week but were 29% lower than last year. 25% of sales were all-cash, up from 15% a year ago.

 


 

Minutes from last month's Fed meeting showed officials were not yet ready to set a timeline for scaling back asset purchases due to high uncertainty around the economic outlook.

Strong jobs data from June shows the labor market continues to recover. Nonfarm payrolls increased 850,000 for the month, led by job recovery in the leisure and hospitality industries.

Lower wage workers are seeing higher wages, as businesses struggle to find and retain help. Retailers and restaurants are having to pay more to hire workers to meet demand.

 

 

In a Fannie Mae survey, 64% of respondents said it's a bad time to buy a home, up from 56% last month. However, 77% said it was a good time to sell, up from 67%.

Mortgage applications dropped for a 2nd week. Refinance apps fell 2% and were 8% lower than a year ago. Purchase apps were down 1% for the week and 14% below last year.

Widespread shortages on building materials continue to prompt home builders to raise prices. The cost of materials is up 26% year over year.

 


Consumer confidence hit a 16-month high in June and was also revised upward for May, as the growing labor market and reopening economy offset inflation concerns.

Companies hired nearly a million new workers in May, according to ADP. This was the largest gain since last June, led by 440,000 new hires in leisure and hospitality.

Jobless claims hit 364,000 last week, reaching a new pandemic-era low. The drop was more than expected, consistent with companies' efforts to meet growing demand.

 

The FHFA reported a monthly home price increase of 1.8% and year-over-year growth of 15.7% for April. Both figures broke previous records.

May pending home sales rose to the highest level since 2005. The increase could signal some relief from the inventory shortage that has driven prices to record highs.

Mortgage applications fell last week to levels not seen in more than a year. Purchase applications dropped 6.9% and refi applications were down 8% from the previous week.

 


 

Fed Chair Powell told a House Select Subcommittee on the Coronavirus Crisis this week that inflation is still seen as transitory, despite recent data showing big increases over last year.

Powell also reaffirmed the Fed's intent to encourage a "broad and inclusive" job market recovery and to avoid interest rate increases based only on fear of coming inflation.

Unemployment claims resumed their downward trend last week, after rising slightly in the prior week. The labor market continues to head toward a full recovery.

 

 

The median price of an existing home was $250,300 in May, a 23.6% year-over-year increase. Low inventory and strong demand are fueling extraordinary home prices.

Existing home sales in May were down for the 4th straight month, falling 0.9%, as just 1.23 million homes were for sale. That's a 2 1/2-month supply and a 20.6% drop from a year earlier.

New home sales also fell in May, reaching a one-year low. The median price of newly built houses jumped 18.1% to $374,400, due in part to expensive materials, including lumber.


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