Overview: Surprisingly hawkish comments from new Fed Chair Jerome Powell caused mortgage rates to rise on Tuesday. However, mortgage rates improved on each of the other days over the past week and ended a little lower.

Jerome Powell's first testimony to Congress as Fed Chair on Tuesday was the main focus for investors over the past week. Overall, his comments were viewed as more hawkish than expected, meaning in favor of a faster pace of rate hikes. This was mostly due to his optimism about the strength of the economy and his expectation for a rise in inflation. According to Powell, his “personal outlook for the economy has strengthened since December,” and he thinks inflation will increase to the Fed’s target level of 2% “over the medium term.” Investors reacted to his apparent inclination toward tighter monetary policy by pushing bond yields higher, including mortgage rates.

The recent data on home sales activity showed unexpected weakness. In January, contracts signed for previously owned homes fell well short of expectations, with a decline of 5% from December and 4% lower than a year ago, reaching their lowest level since October 2014. A lack of inventory in many regions was the primary cause. The news wasn’t any better for contracts signed for new homes, which declined 8% in January from the prior month. Week Ahead

Looking ahead, the core Personal Consumption Expenditures (PCE) Price Index, the inflation indicator favored by the Fed, will be released on Thursday. The Institute for Supply Management (ISM) Manufacturing Index will come out on Friday, followed by the ISM Services Index on March 5. The important monthly Employment Report will be released on March 9. In addition, the next European Central Bank meeting on March 8 could influence U.S. mortgage rates.