GDP shows impressive growth in Q4
The gross domestic product, a measure of all the goods and services produced, increased at a 3.3% annual rate in the 4th quarter of 2023. Market experts were only expecting a 2.0% increase.
This report also featured data for the full year. The U.S. economy grew at a 2.5% pace. This was also well ahead of market projections, and stronger than the 1.9% mark in 2022.
Spending was the main driver of the growth, with both the government and consumers increasing spending levels in 2023. Beth Ann Bovino, a chief economist at U.S. Bank, stated, “Everybody wanted to have fun. People bought new cars, a lot of recreation spending as well as taking trips. We’ve been expecting a soft landing for some time. This is just one step in that direction.”
The report also showed progress on inflation. Core prices for personal consumption were only up 2% for the quarter.
Dan North, senior economist with Allianz Trade Americas, was a bit more cautious. He stated, “It was a great report, but you didn’t see the market move much because GDP is backward-looking. It told us what happened in October and November and December. It’s great for historical patterns, but it doesn’t really tell us much about where we’re headed.”
How did home sales data end 2023?
Home sales data from December 2023 was released on Thursday morning. The sale of single-family homes in December showed an 8% increase when compared to November 2023 and a 4.4% increase from the totals posted in 2022.
Nik Scoolis, manager, housing economics, for Zonda said, “New-home sales ended 2023 on a high note as mortgage rates dipped below 7% and resale supply remained limited. Looking forward, the current supply/demand dynamic is expected to continue, resulting in new-home sales pushing higher again in 2024.”
The report also showed that home prices were up 4.2% for the year, and available inventory showed improvement comparing December 2023 to December 2022.
How did mortgage rates react to the news?
The national average for a 30-year, fixed-rate mortgage rate ended down 0.05% to 6.90%* on Thursday. New home sales data, home inventory and pricing all showed positive news, and that helped mortgage rates head lower. However, bonds showed strength and rallied after the Q4 GDP announcement.
The next data point that could impact the market will be today’s inflation report. If the data comes in hotter or cooler than expected, we may see movement in the mortgage market.
* National average rates accurate as of 1/25/24 from MortgageNewsDaily.com and are not advertised rates from Guaranteed Rate.
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