Weekly Economic Update 05-22-26: Fed Minutes; Home Builder Confidence; Building Permits; and Housing Starts

The housing market is struggling and the rise of the 30-year mortgage rate certainly won't help.

The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

Another light week for economic data — just a few data points on the housing market, and they weren’t very good. And the 30-year mortgage rate rising to 6.7% isn’t going to help. But when the 10-year treasury is in the 4.7% range, rising more than 20 basis points in a week, mortgage rates are going to respond.

The driver for all this was the Federal Open Market Committee (FOMC) minutes from the May meeting that were released on Wednesday. The committee voted 8-4 to hold rates constant. However, the four dissents were the most at any FOMC meeting since October 1992. There was one dovish dissent (Stephen Miran wanted a quarter-point cut because, well, he is clearly an idiot) and three hawkish ones — Hammack, Kashkari, and Logan — who voted to hold but did not want the easing-bias language.

But what moved the bond market was the fact that the minutes themselves read more hawkish than the vote. Inflation was described as “elevated” and having “moved higher.” The vast majority of participants flagged that inflation will likely take longer to return to 2% than they thought back in March (consider me shocked). Of course there are still tariffs and the “Middle East conflict,” but the committee pointed to “emergent price pressures” in categories unrelated to either. (Maybe the fact that we are printing money at an annualized rate of 11% might have something to do with it).

The real kicker was that a majority said some policy firming would likely become appropriate if inflation kept running persistently above 2%. That is Fed-speak for RATE HIKES — written into the official record. Thus, the moves in the bond market and the jump in mortgage rates.

I bet Kevin Warsh just can’t wait to run his first meeting on June 16th.

Home Builder Confidence

Monday, we got the May report on home builder confidence from the National Association of Home Builders (full release here). Confidence rose three points to 37, slightly higher than expected and up from 34 in April — which was the lowest since September 2025. Even with the bounce, 37 is still well below the 50 breakeven that separates optimism from pessimism, and this is now the 25th consecutive month the index has failed to crack 50. The last reading at or above the line was April 2024. Two-plus years of builders telling us conditions are bad. A three-point bounce does not change that.