Mortgage interest rates have once again hit a historic low. This week's Freddie Mac average for a 30-year fixed-rate mortgage dipped to 2.81%. This time in 2019, the average rate was 3.69%. In 2018? We saw an average of 4.85%.

Despite the historically low rates, mortgage applications went down this past week. According to the Mortgage Bankers Association's Associate Vice President of Economic and Industry Forecasting, Joel Kan, “Applications for government mortgages offset some of the overall decline by increasing 3%, driven by a solid gain in government purchase applications and an 11%  jump in VA refinance applications. Refinance and purchase activity continues to run well ahead of last year's pace, fueled by record-low rates and strong homebuyer demand. Housing supply is a challenge for many aspiring buyers, but activity should continue to stay strong the rest of the year.”

There are a couple of headwinds for people who would like to refinance or purchase a home. First, the lack of inventory continues to plague buyers. A dearth of homes for sale has created bidding wars, forcing consumers to spend more than they would want. Second, there is the issue of unemployment. The latest data from the Labor Department shows we are recovering extremely slowly from the shutdowns due to the pandemic. This last week, nearly 900,000 Americans filed initial unemployment claims. While the unemployment rate is going back down, we are still nearly double the unemployment rate we saw at the beginning of the year. During the HousingWire Annual this week, Fannie Mae's Senior Vice President and Chief Economist Doug Duncan addressed that issue. He said, “At the end of 2019, we were at 3.5% unemployment. We think at the end of 2021, it will be roughly double that, around 6%."

Duncan added that he expects economic recovery to be slow and plodding, estimating about $1.7 trillion in national income was lost during Q2 of 2020. That's a huge obstacle to overcome. Duncan further predicted the end of 2021 to be the point where he believes we will be back to the pre-pandemic levels of 2020. 

Meanwhile, Wall Street saw three straight days of losses this week. Investors are struggling to balance their fading hopes of a stimulus plan before the election with the reality of another round of a COVID-19 outbreak in Europe. 

The three-day decline this week marked the longest losing streak for the major averages in nearly a month. On Thursday, the Dow closed down a mere 19.8 points; it had been down by more than 300 points in earlier trading. The S&P 500 and the Nasdaq dipped by 0.2% and 0.5%, respectively. 

Friday's Dow futures were up due to positive retails sales data from the Census Bureau that far exceeded economists' expectations. 

Of Note:

• 898,000 Americans filed initial unemployment claims this past week. That's the highest level of claims since Aug. 22
• Continuing claims keep falling and have dipped by 1.165 million to around 10 million total. When you look at the less volatile four-week moving average for continuing unemployment claims, we sit around 11.48 million.
• Overall, about half of the people receiving unemployment benefits as of Sept. 26 fall under the Pandemic Unemployment Assistance Program. People with careers as freelancers or contract employees fall under this category. 
• The Labor Department also released the consumer price index numbers for September, showing the CPI increased by 0.2%. That's the smallest increase since May. 
• The cost of used cars and trucks saw the biggest increase with a whopping 6.7% month-over-month and 10.3% year-over-year. 
• Retail Sales jumped by 1.9% in September. Consumer spending is the biggest driver of the economy so that increase is a big, and much-needed, positive. 
• U.K. Prime Minister Boris Johnson says the country needs to prepare for a no-deal Brexit as trade talks with the European Union failed to meet a self-imposed Oct. 15 deadline.