Market Commentary

Updated on May 16, 2025 10:08:41 AM EDT

April's Housing Starts report was this morning's first economic release, revealing a 1.6% increase in new home groundbreakings. This was close to expectations and signals slight growth in the new home portion of the housing sector. However, single-family home starts, that are more relevant to mortgage rates than multi-family/apartment construction, fell 2.1% last month. Furthermore, a secondary reading that tracks newly issued permits and indicates future home starts fell for the month. This allows us to consider the data slightly favorable for bonds and mortgage rates.

Also released this morning was the University of Michigan's preliminary Index of Consumer Sentiment for May. It came in lower than expectations, meaning surveyed consumers felt better about their own financial situations last month than this month. This was the fifth consecutive monthly decline in the index as consumers became more concerned about their finances and inflation. Since waning confidence usually transpires into softer consumer spending numbers, this news was favorable for bonds and mortgage pricing.

Next week is much lighter than this week in terms of scheduled economic data for the markets to digest. There are just three monthly reports set for release, two of which are related to the housing sector. The other is April's Leading Economic Indicators from the Conference Board late Monday morning. There is also a Treasury auction midweek that could affect afternoon trading one day. What may be the primary focus is the large number of Fed-member speaking engagements throughout the week. Look for details on the relevant events in Sunday evening's weekly preview.