Weekly Rate Update - 3/20/2006

Rates rebounded last week with the average mortgage interest rate dropping about 1/8%. The two major forces driving the improvement were February Retail Sales and the February CPI index report. Retail sales were weak across the board in February while the CPI came in lower than expectations. These numbers together indicate that the long run of interest rate increases by the Fed are probably doing their job and that perhaps the economy is cooling somewhat.

In other real estate news, the January housing starts number was revised upward to a 12 year high. Somehow, this type of news does not receive the same press as the negative housing news we've been hearing lately. The press seems bound and determined to shove this housing bubble down our throats, but where is the data to back it up?

This week's major news release will be Tuesday's Producer's Price Index (PPI). Will the numbers confirm what we saw in the CPI last week? On Thursday we will get a look at initial jobless claims and the existing home sales numbers for February.