Skip to main content. Skip to contact links. Skip to navigation. If you need loan servicing, click to call our loan servicing department at 855-979-1084 If you wish to e-mail our servicing department, click here to e-mail servicing at movement dot com If you have any other questions, click here to call our corporate office at 888-589-4416 Skip to footer navigation.

Growing economy raises new challenge for the Fed

By: Movement Team
June 30, 2023

The Federal Reserve continues to work down an uncharted economic path trying to balance controlling inflation with avoiding recession. Data released over the past week, much like the economic data over the last few months, painted a conflicting picture of what’s ahead.

The United States economy grew more than expected in the first quarter of this year, according to the Commerce Department, with gross domestic product (GDP) showing 2% growth in Q1. That is well above the previous estimate of 1.3% with consumer spending reportedly being one of the main factors driving growth. This is a really good sign that what the Fed has done so far with interest rate hikes does not appear to be hurling the economy into a recession. However, that also means it’s now even more likely the Fed will institute further rate hikes this year to control inflation. 

The core personal consumption expenditures index, or core PCE, is one of the Fed’s preferred measures of inflation. The PCE report looks at what people pay for goods and services in America with the core report excluding what are considered the more volatile readings like gas and food. The release of the core PCE data June 30 showed it edged slightly lower to 4.6% from 4.7% on an annual basis. On a monthly basis, core PCE rose by 0.1%. 

Treasury note yields, which had been relatively stable over the last few weeks, spiked at the end of the week creeping closer to 3.9%. Keep in mind that mortgage rates tend to follow the trajectory of the 10-year note yield, which means rates may be slightly higher day-to-day depending on where the 10-year note yield lands. 


New Home Sales Rebound in June

Freddie Mac’s 30-year fixed-rate mortgage average increased slightly week-over-week, but has remained mostly consistent over the last few months. Freddie Mac economists noted the relative stability in their report saying, “Mortgage rates have hovered in the six to seven percent range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year. New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction. The improved demand has led to a firming of prices, which have now increased for several months in a row.”

New home sales were up 12.2% to 763,000 units—the highest level since February 2022—according to the latest report from the Commerce Department. The median home price for a new home also fell in May, dropping by 7.6% year-over-year to hit $416,300. 

The same story cannot be told for existing home sales. The National Association of Realtors showed pending home sales were down 2.7% in May. That doesn’t mean people don’t want to buy a house, quite the contrary. Lawrence Yun, Chief Economist for the NAR, said in their release that, “Despite sluggish pending contract signings, the housing market is resilient with approximately three offers for each listing. The lack of housing inventory continues to prevent housing demand from being fully realized.”

Movement Mortgage "MM" red logo
Author: Movement Team

Movement Mortgage exists to love and value people by leading a Movement of Change in its industry, corporate cultures and communities. A national top 10 retail mortgage lender, Movement funded more than $20 billion in residential mortgages in 2022. Movement is best known for its innovative mortgage process and referable experience, which begins with upfront underwriting and a seven-day loan processing goal. For more information, visit