Mortgage rates decreased one basis point last week according to the Freddie Mac Primary Mortgage Market Survey as of May 14th. After increasing almost 50 basis points over the course of March, rates have now trended downwards by about 10 basis points in the past six weeks. While purchase demand is softening, it remains above this time last year and recent data also shows existing home sales edging up modestly.
Mortgage applications increased 1.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 8th. “Mortgage rates were generally higher last week, with the 30-year fixed rate at its highest level in five weeks,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications were higher over the week and 7 percent ahead of last year’s pace, with all loan types showing increases in purchase activity, as potential homebuyers shrugged off the current economic and mortgage rate uncertainties and returned to the market. Refinance applications declined slightly, led by conventional and VA refinancings, and accounted for a little more than 40 percent of applications last week, the lowest share since July 2025.”
Prices that consumers pay for a wide range of goods and services increased at a faster-than-expected pace in April, as another burst in energy prices raised further concerns about inflation’s impact on the U.S. economy. The consumer price index rose at a seasonally adjusted 0.6% for April, putting the one-year pace at 3.8%, the Bureau of Labor Statistics reported Tuesday. Excluding food and energy, the core CPI increased 0.4% and 2.8%, respectively, keeping inflation well above the Federal Reserve’s 2% goal as the monthly rate was the highest since January 2025. The annual headline inflation rate was the highest since May 2023 and was up half a percentage point from March. “Inflation is the key drag on the U.S. economy now,” said Heather Long, chief economist at Navy Federal Credit Union. “This is hurting Americans. There is a real financial squeeze underway. For the first time in three years, inflation is eating up all wage gains. This is a setback for middle-class and lower-income households and they know it.”
The war with Iran is forcing Americans to pay more for gasoline as people cut back on purchases of some long-lasting goods. Retail sales climbed 0.5% in April from the prior month, the Commerce Department said Thursday, down from March’s 1.6% and marking the third consecutive monthly increase. Various surveys show that US consumers have grown frustrated with price spikes associated with the conflict in the Middle East. Yet Americans may continue to spend, so long as the unemployment rate remains low and businesses continue to add jobs. “April retail sales echoed what we’ve heard across corporate conference calls for weeks now; that the US consumer remains resilient despite soaring gas prices,” Bret Kenwell, US investment analyst at eToro, wrote in analyst note Thursday. “Fuel-price spikes typically take a couple of months to work their way into household budgets, so if energy costs stay high, the second half of the year could present a more complicated setup for consumers, the economy, and the Fed,” he added.
