Mortgage rates decreased by five basis points last week according to the Freddie Mac Primary Mortgage Market Survey as of June 4th. Although rates have generally been on an upwards swing since late April, they are still 37 basis points lower than in the same period last year. With mortgage rates in the mid-6% range and income growth outpacing home price growth, housing affordability is marginally improving.
Mortgage applications decreased 2.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending May 29th. “The prospect of easing energy prices given the evolving situation in the Middle East brought mortgage rates slightly lower last week. The retreat in rates, however, did not lead to an increase in mortgage applications,” said Joel Kan, CMB, MBA’s Vice President and Deputy Chief Economist. “Purchase applications remained ahead of 2025’s pace but were at its slowest weekly pace since April, and refinance activity was at its weakest since last June.”
U.S. manufacturing expanded in May for the fifth consecutive month, with May’s PMI of 54% the strongest print since May 2022 and representing a 1.3-percentage-point improvement over April’s reading, with gains in new orders and production driving the increase. All six of the largest manufacturing industries expanded in May, ISM said. New orders grew for a fifth straight month while the Production Index reached its seventh consecutive month of expansion. Despite the strong headline figure, cost pressures remained acute. Business Survey Committee Chair Susan Spence said price increases continue to be driven by higher steel and aluminum costs, tariffs on imported goods, and petroleum-based product inflation tied to the Middle East conflict.
The number of Americans filing claims for unemployment benefits increased more than expected last week, but the underlying trend remained consistent with a stable labor market. Initial claims for state unemployment benefits rose 13,000 to a seasonally adjusted 225,000 for the week ended May 30, the Labor Department said on Thursday. The four-week moving average of claims increased only 6,500 to 214,750. Though the Middle East conflict has yet to make a noticeable impact on the labor market, uncertainty is growing. The U.S.-Israel war with Iran, now in its fourth month, has severely disrupted the supply of commodities and boosted prices of goods including energy, aluminum and fertilizers.
