Overview: During a light week for economic data, investors remained focused on the concerning spread of the coronavirus in many regions. Mortgage rates dropped slightly to new record-low levels.

Reduced economic activity resulting from the pandemic has caused a significant decline in inflation, which has helped keep mortgage rates low. The Consumer Price Index (CPI) is a widely followed monthly inflation report that looks at the price change for goods and services. In June, core CPI, which excludes the volatile food and energy components, was just 1.2% higher than a year ago — the same annual rate of increase as last month. This was down compared to readings above 2% during the first three months of the year.

Both Freddie Mac and the Mortgage Bankers Association (MBA) reported that average rates for 30-year fixed-rate mortgages reached record-low levels again this week, in part due to recent tame inflation data like CPI. In addition, the MBA revealed that applications to purchase a home were 16% higher than a year ago at this time, and refinance applications were a massive 107% higher.

New claims for unemployment benefits continued to decline this week after spiking dramatically due to the pandemic. During January and February, jobless claims typically were a little more than 200,000 each week. Beginning in late March, there were three weeks of readings above 6 million. Since that time, however, they have steadily dropped each week, and the latest results came in at a relatively better level of 1.3 million.

Core CPI (annual % change)

Week Ahead

July 16 — European Central Bank meeting

July 16 — Retail Sales report

July 17 — New Residential Construction report (aka Housing Starts)

July 22 — Existing Home Sales report

July 24 — New Home Sales report