Lipkin, who built Valley National Bancorp from a small community bank into a regional institution with 200 branches in four states, passed away this week at age 84.

The latest Residential Construction report from the Census Bureau showed a noticeable drop in overall housing starts in May, though single-family activity managed a small gain. Building permits also declined, continuing a trend of slight cooling in new construction momentum. As usual, the market focuses most on building permits and housing starts , with the latter representing the beginning of actual construction activity. Total starts fell nearly 10% to an annual pace of 1.256 million , down from 1.392 million in April. The decline was almost entirely due to a sharp drop in multifamily starts , which fell from 420k to 316k , the lowest level in over a year. In contrast, single-family starts edged up slightly to 924k from 920k . Building permits—a forward-looking indicator—also declined, dropping 2% from 1.422 million to 1.393 million . That included a 2.7% decline in single-family permits and a moderate slowdown in multifamily authorizations.

Underwhelming (But Friendly) Conclusion

The present week didn’t manage to offer nearly as much excitement as the previous few examples, but that’s not necessarily a bad thing considering yields/rates are near the lower boundary of their recent ranges.  Today looked like it may have been a higher rate day at the start of the session, but bonds arrested the selling trend and reversed course after dovish comments from Fed’s Waller. Europe’s close was also beneficial for US bonds, helping us get all the way back into modestly stronger territory before trading levels flat-lined into the U.S. close. 

Econ Data / Events

Philly Fed Index 

-4.0 vs -1 f’cast, -4.0 prev

Leading Indicator Index

-0.1 vs -0.1 f’cast, -1.0 prev

Market Movement Recap

10:09 AM Moderately weaker overnight, following European bonds, but bouncing back a bit after AM data. MBS down 1 tick (.03) and 10yr up 2.7bps at 4.419

12:20 PM Decent rally at 11am. 10yr now down 1bp at 4.382.  MBS up 3 ticks (.09).

03:09 PM flat all afternoon.  10yr down 1.8bps at 4.374 and MBS up 5 ticks (.16). 

With Thursday being a federal holiday, banks (and more importantly, the underlying market for mortgage related bonds) were closed.  This means that lenders were not able to update mortgage rates.  It turns out that it wouldn’t have mattered either way as the average lender has barely budged from Wednesday’s levels.  But let’s not miss an opportunity to deliver news that’s technically good even if only just.  Over the past 3 business days, average rates have fallen 0.05%.  This keeps us close to the lowest levels seen since April 4th with top tier 30yr fixed scenarios at 6.86 on the MND daily rate index. Given some of the news headlines this week, it bears repeating that this week’s Fed announcement has nothing to do with rates holding steady.  In fact, even if the Fed had cut rates (which was not seen as even a remote possibility by financial markets), mortgage rates could just as easily have moved higher.  

Builder sentiment declined for the second straight month according to the National Association of Homebuilders (NAHB) and Wells Fargo’s latest Housing Market Index (HMI). The headline index dropped two points to 32 in June, marking another step down toward the post-pandemic lows seen in 2023. All three components of the index moved lower:

Current sales conditions fell two points to 35

Sales expectations for the next 6 months dipped to 40

Buyer traffic dropped to 21

Persistent affordability challenges—namely high mortgage rates and tariff-related material costs—remain major headwinds. As builders adapt, many are turning to price cuts and incentives to attract buyers. In fact, the share of builders reporting price reductions climbed to 37% in June, the highest since NAHB began tracking the data monthly in 2022. The average price cut held steady at 5%. Incentives were also widespread, with 62% of builders reporting some form of sales sweetener, up slightly from 61% in May. Despite the gloomy headline, it’s worth noting that the market continues to be highly sensitive to any shift in rate expectations or material costs. As the broader economic picture evolves, builder sentiment may yet rebound—but for now, confidence remains historically low.

Mortgage application activity declined modestly last week despite a drop in rates, according to the Mortgage Bankers Association’s (MBA) latest survey. The Composite Index fell 2.6% on a seasonally adjusted basis for the week ending June 13, with both purchase and refinance activity posting week-over-week declines. “Even with lower average mortgage rates, applications declined over the week as ongoing economic uncertainty weighed on potential homebuyers’ purchase decisions,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. Refinance applications were down 2% from the prior week but remain 25% higher than the same week last year. Purchase applications fell 3% on a seasonally adjusted basis but are still 14% above 2024 levels. These declines come after a brief rebound in early June and underscore the fragile sentiment in the housing market. The average 30-year fixed rate decreased to 6.84%, the lowest level since April, with modest declines across most other loan types as well. Mortgage Rate Summary:

30yr Fixed: 6.84% (−0.09) | Points: 0.66 (+0.02)

15yr Fixed: 6.14% (−0.02) | Points: 0.70 (+0.04)

Jumbo 30yr: 6.81% (−0.12) | Points: 0.63 (no change)

FHA: 6.57% (−0.03) | Points: 0.90 (+0.02)

5/1 ARM: 6.10% (−0.12) | Points: 0.57 (+0.24)

Bill Pulte’s social media posts saying inflation has fallen far enough added to intensified political pressure on the independent Federal Reserve chairman.

The department’s head pointed out that manufactured housing is the most affordable non-subsidized option for building homes.

The Senate version includes restoration of the mortgage interest deduction, but a tax code revision likely would stifle foreign investment in real estate.

Seven officials now foresee no rate cuts this year, compared with four in March. Two others pointed to one cut this year.