Over the past week, increased concerns about Turkey offset stronger than expected economic data, and mortgage rates ended the week with little change. 

Due to a combination of Turkish government policy decisions, U.S. Fed rate hikes, and other global factors, economic conditions in Turkey have been getting worse for quite a while. The clearest indication of Turkey's problems has been the steady decline in its currency, which has lost more than half its value over the last five years. Sharply higher inflation has been another consequence. To try to preserve their wealth, many citizens have taken measures such as buying gold. The situation in Turkey potentially could deteriorate even further as the Trump administration considers increasing tariffs on Turkish goods in response to the detention of an American pastor. 

A lack of inventory has been holding back home sales, and the latest data on new construction was not encouraging. In July housing starts increased just 1% from the downwardly revised June reading, which was the lowest in nearly two years. The modest increase was nearly equal for both single-family and multi-family units. After reaching a 10-year high in November 2017, single-family homebuilding has lost momentum. Builders point to skilled labor shortages and rising material costs as impediments to a faster pace of new construction. On the plus side, building permits matched the expected levels in July.

Looking ahead, the minutes from the August 1 Fed meeting will come out on Wednesday. These detailed minutes provide additional insight into the debate between Fed officials about future monetary policy and have the potential to move markets. Existing Home Sales will be released on Wednesday and New Home Sales on Thursday. Durable Orders, an important indicator of economic activity, will come out on Friday. In addition, news about Turkey or tariffs could influence mortgage rates.

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