Jobless claims plunged to the lowest level since 1973 this week, the biggest drop since April 2009. Labor market strength can pressure rates higher. According to a recently released Fed report, the economy and inflation expanded at a modest-to-moderate pace from November to the end of 2017. Inflation, which pressures interest rates to move higher, is not increasing across the U.S. consistently. West coast metro areas are showing higher inflation.
Although homebuilder confidence was down slightly in January, it’s still strong. Builders’ biggest concerns remain costs of material and labor shortages. New housing starts fell more than expected in December. However, the moderation is likely to be temporary amid strong demand for housing. Mortgage purchase applications jumped 4.1% last week, and volume rose 5.6% over last year. Speculation is that consumers fear rates may be increasing.