Overview: The past week was very quiet for mortgage rates, and they ended with little change. The economic data was modestly stronger than expected overall, but its impact was small.

The housing sector reports released over the past week contained mostly positive news. In December, sales of previously owned (existing) homes increased more than expected from November to the highest level since February 2018 and were 11% higher than a year ago. National median existing-home prices were up 8% from a year ago. On the flip side, the inventory of homes for sale dropped to just a 3.0-month supply, a record low, and it was 9% lower than a year ago. A 6.0-month supply is generally considered a healthy balance between buyers and sellers.

Since a lack of inventory has been holding back home sales in many regions, Friday's report on home construction was very encouraging. In December, housing starts surged 17% from November, far above the consensus forecast, and were at the best level since 2006. They were a massive 41% higher than a year ago. The National Association of Home Builders (NAHB) index of home builder confidence also remained near the highest level since 1999.

In addition to homes, confident consumers have been rapidly purchasing a wide range of items in recent months. The latest report showed that consumer spending remained solid during the holiday shopping season. In December, retail sales rose 0.3% from November and were up an impressive 5.8% from one year ago. As usual, growth in online sales was sizable while department stores struggled.

Existing Home Sales (millions)

Week Ahead

January 23 — European Central Bank meeting

January 27 — New Home Sales report

January 29 — U.S. Federal Reserve meeting

January 29 — Pending Home Sales (PHS) Index