For the second week in a row, mortgage rates increased one basis point last week according to the Freddie Mac Primary Mortgage Market Survey released on February 5th. Rates are nearly 80 basis points lower than the same period last year and are at their lowest level since September 2024. The combination of improving affordability and availability of homes to purchase is a positive sign for buyers and sellers heading into the spring home sales season.
Mortgage applications decreased 8.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending January 30th. “Application volume was down last week, led by a 14 percent drop in purchase applications. Winter Storm Fern likely had an impact as much of the country was snowed in, hampering homebuying activity,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The annual increase in purchase applications was the weakest since April 2025. Refinance activity also decreased over the week, despite mortgage rates moving lower. The 30-year fixed rate saw a slight decline, but not significant enough to incentivize more borrowers to refinance”.
Per the ISM Manufacturing PMI Report, economic activity in the manufacturing sector expanded in January for the first time in 12 months according to the nation’s supply executives. According to Susan Spence, MBA, Chair of the Institute for Supply Management Manufacturing Business Survey Committee “The Manufacturing PMI registered 52.6 percent in January; a 4.7 percentage point increase compared to the seasonally adjusted reading of 47.9 percent in December. In January, U.S. manufacturing activity returned to expansion territory, with improvements in all five subindexes that make up the PMI (New Orders, Production, Employment, Supplier Deliveries, and Inventories), though the Employment and Inventories indexes remain in contraction. Regarding output, the Production Index is in expansion for the third month in a row, and the Employment Index, though still in contraction, saw a 3.3-percentage point improvement. However, 66 percent of panelists still indicate that managing head count is the norm at their companies as opposed to hiring.”
The number of Americans filing new applications for unemployment benefits increased more than expected last week, likely boosted by snowstorms across much of the country, but labor market conditions remain stable. Initial claims for state unemployment benefits jumped 22,000 to a seasonally adjusted 231,000 for the week ended January 31, the Labor Department said on Thursday. Claims are also likely to rise as the volatility at the turn of the year washes out of the data. Through the distortions, the labor market remains in what economists call a “low hire, low fire” mode, despite recently announced layoffs by United Parcel Service and Amazon.com. Economists have blamed the labor market stasis on uncertainty stemming from import tariffs and the growing popularity of artificial intelligence, which they say has left businesses unsure of their staffing needs as they deploy more resources towards AI. They are cautiously optimistic that job growth will pick up this year as tax cuts underpin consumer spending.
