Consumers had no problem ringing up sales in July (and June, it turns out!), while new construction ground down.

July Retail Sales rose 0.6 percent from June versus the 0.3 percent expected, while June was revised higher to 0.3 percent from -0.2 percent. It was the largest increase in seven months as consumers spent on autos and discretionary items. When stripping out autos, sales rose 0.5 percent in July, also above expectations. Consumer spending makes up about two-thirds of the U.S. economy, so this report was welcome news.

New construction ground down in July with Housing Starts falling 4.8 percent from June to an annual rate of 1.155 million units, below the 1.217 million expected. Homebuilders cite many reasons for the decline, including a lack of skilled labor, lack of lots to build on and higher costs for materials. Single-family starts, which make up the biggest share of the housing market, fell 0.5 percent. Starts on multi-family dwellings with five or more units plunged 17.1 percent from June to July. Year over year, Housing Starts were down 5.6 percent.

Building Permits, a sign of future construction, also fell in July, down 4.1 percent from June to an annual rate of 1.223 million annualized units. This was just below the 1.247 million expected.

Meanwhile, minutes released from the July Federal Open Market Committee meeting revealed some Fed members are concerned about low inflation and expect it to remain below the Fed's target 2 percent objective longer than previously expected. Also, no indication was given as to a start date for the reduction in the Fed's $4.5 trillion balance sheet.

The dovish Fed minutes coupled with weaker-than-expected construction data lifted Bond prices. At this time, home loan rates remain near historic lows.

If you or someone you know has questions about home loan products or current rates please contact me. I'd be happy to help.

Forecast for the Week

Find out if July home sales sizzled or fizzled.

Housing data kicks off Wednesday with New Home Sales followed by Existing Home Sales on Thursday.

Also on Thursday, weekly Initial Jobless Claims will be released.

On Friday, Durable Goods Orders will be shared.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices improved recently, lifted by economic news in addition to geopolitical events at home and abroad. Home loan rates remain near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Aug 18, 2017)