Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.
Mortgage Rate Trends & Forecasts
- The main reason for higher mortgage rates this week was due to a weak 20-year bond auction that caused a sell off in the bond market.
- Mortgage rates have seen a slight upward trend since the beginning of the year due to stronger inflation and labor market data.
- The minutes from the most recent Fed meeting were released this week which confirmed that they are certain to cut rates this year, but this will likely not occur by the next meeting in March.
Existing Home Sales
- Housing inventory remains low with about 3 months of supply of homes versus the normal market value of 4.6 months.
- The median home price rose by 5% from the previous year, reaching $379,100.
- Lawrence Yun, Chief Economist for NAR, notes that mid-priced homes are receiving multiple offers, with a significant share (32%) being cash deals, indicating a market driven by record-high housing wealth.
Producer Price Index
- The Producer Price Index measures inflation from the perspective of producers.
- Similar to the recent CPI report, inflation on the producer side was also higher than expected for the month of January.
- Services were the main culprit in the high inflation reading that includes items such as health care and legal services.
- RATES MOVE SLIGHTLY HIGHER – A weak 20-year bond auction pushes rates slightly up to highs not seen since November.
- FHA HELPING BORROWERS KEEP HOMES – The new offering, called the Payment Supplement, will help borrowers bring their mortgage payments current and avoid foreclosure.
- ACTIVE INVENTORY IS UP – Recent data shows that active inventory is up 15.7% and new listings are up 0.9% YoY.
- THE FED EXPRESSES CAUTION – Meeting minutes show that the Fed plans to cut rates this year, but express caution in lowering too quickly.