Mortgage Services

The Bureau of Labor Statistics released a highly technical research paper this week examining how the agency handled missing shelter inflation data during the October 2025 government funding lapse. The issue stemmed from the CPI’s housing survey, which was unable to collect rent data during the shutdown period. With no fresh survey results available, BLS relied on a “carry-forward” methodology that essentially treated rents as unchanged for the affected sample. That decision temporarily froze the CPI’s rent and owners’ equivalent rent (OER) indexes in October 2025, likely making shelter inflation appear somewhat cooler than it actually was for the next several months. In the new paper, BLS tested several alternative approaches to estimate what shelter inflation may have looked like under different assumptions. Every alternative method produced firmer rent and OER inflation readings than the official CPI figures published at the time. Depending on the methodology used, the research suggests shelter inflation may have been understated by roughly 0.3% to 0.6% on a year-over-year basis during the affected stretch. That may sound minor, but for markets closely tracking inflation and Fed policy expectations, a few tenths can matter. Still, BLS stressed that the distortion was temporary rather than structural. Once the affected housing panel was surveyed again in April 2026, both the official indexes and the research indexes largely converged back to similar levels. In other words, April's housing inflation essentially counted two 6-month cycles' worth. Thus, monthly housing inflation was more like 0.3 than 0.6.

Refinance activity continued to recover in the first quarter of 2026, but mortgage servicers retained a smaller share of borrowers despite the stronger lending environment, according to the latest ICE Mortgage Monitor. ICE estimated that roughly 585,000 first-lien refinances totaling $242 billion closed during the quarter, up from a revised 550,000 loans and $234 billion in the fourth quarter of 2025. Refinance volume more than doubled compared with the same period last year and reached its highest quarterly level since early 2022. Refinances accounted for nearly 44% of all mortgage originations in the first quarter, the highest share in four years. Rate-and-term refinances represented 60% of overall refinance activity, marking a five-year high as lower mortgage rates improved borrower incentive. Even with refinance activity gaining momentum, servicer retention weakened during the quarter. ICE reported that servicers retained 32% of refinancing borrowers, down from 35% in the prior quarter. Retention among rate-and-term refinances fell from 42% to 37% . It should certainly be noted that, although retention moved lower in the most recent quarter, overall levels are still the highest in years and that rate/term refis, in particular, have ramped up steadily over the past 3 years.

Existing-home sales edged slightly higher in April, stabilizing after March’s decline as improving affordability and increased inventory provided modest support for buyers. Sales increased 0.2% to a seasonally adjusted annual rate of 4.02 million , matching the pace seen one year ago. “Despite mixed macroeconomic signals—including a record-high stock market and historically low consumer confidence—home sales were modestly boosted by the continued improvement in housing affordability,” said NAR Chief Economist Lawrence Yun. He also noted that mortgage rates remain lower than a year ago while income growth continues to outpace home price appreciation. Inventory continued to improve in April, though supply remains relatively constrained by historical standards. Total housing inventory climbed to 1.47 million units , up 5.8% from March and 1.4% higher than a year ago, representing a 4.4-month supply of homes. “Inventory still remains tight,” Yun said, adding that multiple offers are still occurring in some markets even as buyers take more time to make purchasing decisions. Home prices continued to move higher nationally, though appreciation remained relatively modest. The median existing-home price increased to $417,700 , up 0.9% year-over-year and marking the 34th consecutive month of annual price gains. Affordability improved compared to last year across all regions. The Housing Affordability Index registered at 110.6 in April, up from 101.4 one year earlier, reflecting the combination of slower home price growth, easing rates, and stronger household incomes.