Rates Remain Effectively Unchanged At 6.62%

Mortgage rates remained basically unchanged last week as markets adjust to economic expectations for 2024. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.62%, inching up from the week prior’s 6.61%. A year ago at this time, the 30-year FRM averaged 6.48%. This is the first increase since October. Rates have fallen more than a full percentage point since then, giving homebuyers more breathing room as they struggle against record-high unaffordability. The 15-year fixed rate dropped, however, from 5.93% to 5.89%. A year ago, it averaged 5.73%. Freddie Mac Chief Economist Sam Khater ascribed the news to the slow machinations of the market as it “digests incoming economic data.” He pointed out that rates stopped their…

PCE Soars To Four-Month High

The Fed’s preferred inflation measure soared to a four-month high in September, increasing the likelihood of future Fed rate hikes. The personal consumption expenditures price index tracks what Americans buy and for how much, offering a view into their spending habits. The core index, which excludes food and energy components, increased by 0.3% in September.  When adjusted for inflation, consumer spending rose 0.4%. The data comes on the heels of news that the economy grew by 4.9% in Q3 2023, the fastest pace in two years and more than expected. Consumers once again waved off recession fears, but the increase puts the Central Bank in a tough position as it battles inflation. Analysts generally maintain that another increase won’t come…

How The Housing Market Is Affected By Inflation

By ERIN FLYNN JAY Inflation has affected the housing market as higher costs of living puts more stress on the average person’s finances. The average American household spent $709 more in July than they did two years ago to buy the same goods and services, according to Moody’s Analytics. “High inflation of the past 2+ years has done lots of economic damage,” Mark Zandi, chief economist at Moody’s Analytics, wrote in a post on X, the platform formerly known as Twitter. Rick Sharga, President & CEO of CJ Patrick Company, said among other things, inflation makes it harder for renters to save money for a down payment, and as home prices tend to go up over time, the amount of…

Housing Starts Sank In June, But Permits Offer A Glimmer Of Hope

Housing construction declined last month, but the future looks brighter thanks to a bump in permits. New U.S. home construction rose for the first time in six months, according to data from the U.S. Census Bureau. Residential starts fell by 8% to an annualized rate of 1.43 million. This is well below estimates from economists surveyed by Bloomberg, who expected a pace of 1.48 million. Permits for new construction also dipped, down 3.7%% to a rate of 1.44 million. Permits offer an indication of how many homes will be built in the coming months. But on the bright side, single-family construction permits in particular saw an increase, up 2.2% from May to the highest pace since June 2022. Builders continue…

Average Rate Comes Close To 7%

The average interest rates closed in on the 7% mark last week, pushing affordability further out of reach for many Americans. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.96%, up from 6.81% the week prior in the second week of 10+ bps jumps. A year ago at this time, the 30-year FRM averaged 5.51%. The 15-year fixed-rate mortgage shot up as well, from 6.24% to 6.30%. A year ago, it averaged 4.67%. “Incoming data suggest that inflation is softening, falling to its lowest annual rate in more than two years. However, increases in housing costs, which account for a large share of inflation, remain stubbornly high, mainly due to low inventory relative to demand,” said…

June’s Inflation Slip Bodes Well For Homebuyers

Inflation cooled significantly in June, increasing by only 3% YOY, according to the Fed’s preferred inflation measure, the Consumer Price Index. This is down from a 4% increase the month prior and fully a third less than its peak at nearly 9% last year. June’s data suggests it’s possible for the U.S. to make a “soft landing” and reach its 2% inflation target without throwing the economy into recession. But it may yet be too early to celebrate. “This is very promising news. The pieces of the puzzle are starting to come together,” Laura Rosner-Warburton, senior economist and founding partner at MacroPolicy Perspectives, told the New York Times. “But it’s just one report, and the Fed has been burned by…

Fannie Mae: Recession “When,” Not “If”

Recession is still on the horizon, but housing may support the economy moving through it, according to Fannie Mae’s Economic and Strategic Research Group. In recent commentary, the group noted that mixed economic data has muddied the waters on the economy’s strength. But recession “remains the most likely outcome” of tightening monetary policy and late-stage business cycle dynamics. Inflation has improved thanks to slowing domestic and global economic growth, but core inflation is still sticky. “Lessons learned from the inflationary era of the 1970-80s … lead the ESR Group to expect that the Fed will maintain its restrictive monetary policy stance until it is abundantly clear that inflation pressures from the labor market have eased,” the group stated. But that…

Mortgage Rates Tick Down Thanks To Fed Pause

Mortgage rates ticked down again, the second consecutive week of declines. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.69%, down from 6.71% the week prior. A year ago at this time, the 30-year FRM averaged 5.78%. The 15-year fixed-rate mortgage increased, however, up from 6.07% to 6.10%. A year ago, it averaged 4.81%. “Mortgage rates decreased slightly this week in anticipation of the pause in rate hikes by the Federal Reserve,” said Sam Khater, Freddie Mac’s Chief Economist.  The pause did come: after ten consecutive increases, the Fed declined to raise interest rates at its June meeting.  “We have been seeing the effects of our policy tightening on demand in the most interest-rate-sensitive sectors of…

Latest Rate Hike Unnecessary, NAR’s Lawrence Yun Says

At the latest Federal Open Market Committee meeting, the Central Bank hinted at a pause in rate hikes as soon as June but still increased the benchmark rate by a quarter-point. Lawrence Yun, chief economist at the National Association of Realtors, found that puzzling. During the “Residential Economic Issues & Trends Forum” at NAR’s 2023 REALTORS Legislative Meeting, he called the increase unnecessary and stressed further increases harm the housing market and the economy at large.  Inventory, not interest rates, is the driving force behind the current housing market. Stock remains down 40% compared to 2019, while demand keeps growing. “We have to stop the bleeding before improvement takes place,” Yun said. “We need to get more inventory, and the…

Inflation Climbed In March But Showed Signs Of Cooling

Inflation continued its upward march last month but showed signs of cooling, according to new data from the Bureau of Labor Statistics. The Consumer Price Index rose 5% YOY in March, down from 6% in February. Month-over-month, inflation was up 0.1% on a seasonally adjusted basis, compared to 0.4% in February. The core index, which measures everything but volatile food and fuel costs, ticked up by 0.1% to 5.6% YOY. Though the increase is slight, it’s the first YOY acceleration since September. “This is obviously a short-term setback for the Fed. However, inflation was never expected to decelerate in a straight line,” Tiffany Wilding, managing director and North American economist at PIMCO, wrote in a note. “[N]otwithstanding this report we…