A look at the economy….

The labor market continues to show strength, with unemployment of 4.1% nearing the Fed goal of 3.8%. Members of the Fed have expressed expectations that inflation will continue to rise this year. Higher inflation will likely contribute to higher mortgage rates.

After 3 months of declines, retail sales were up in March. The increase was fueled by auto sales and big-ticket household purchases.

And how that translates to the housing market…

March housing starts were up even more than expected. Although confidence among builders dropped slightly in April, the confidence index remains in solid territory. Buyer demand for new housing is still strong. Total mortgage applications were up 4.9% for the week, and purchase applications were up 10% over a year ago.