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
- Mortgage rates are relatively unchanged week-over-week with some volatility mixed in due to economic data and bond auction results.
- Last week saw 2-year, 5-year, and 7-year Treasury auctions that were met with weak demand and put upward pressure on mortgage rates.
- Recent GDP and labor market reports came in stronger than expected and the Fed would like to see more economic weakness to support disinflation.
Personal Consumption Expenditures (PCE)
- Headline inflation rose 0.17% in January, close to the expected 0.2%, while the year-over-year reading remained at 2.6%.
- Annualized core PCE over the last 6 and 8 months is 1.85% and 2.08%, respectively, which are close to the Fed’s target of 2%.
- Although the Fed prefers the Core PCE measure for gauging inflation, it should be noted that the CPI tends to move the markets a bit more.
Pending Home Sales
- Pending Home Sales (signed contracts on existing homes) surged 8.3% from November to December.
- The large jump was attributed to the decline in mortgage rates we’ve seen since the highs back in October 2023.
- The Chief Economist at the National Association of Realtors, Lawrence Yun, noted that sales are expected to rise significantly in each of the next two years.
- An increase in the supply of homes on the market will be essential to satisfying all of the demand that current exists.
- RATES UNCHANGED WEEK-OVER-WEEK – Mortgage rates were volatile within a narrow range over the last week but are relatively unchanged.
- ECONOMY BOOSTED BY NEW HOME SALES – Continue demand for new housing helped employ workers, stimulate the purchase of goods, and avoid a recession in 2023.
- ACTIVE INVENTORY RISES – For the 11th straight week, active listings grew and looks to improve availability and affordability heading into the spring season.
- INFLATION CONTINUING TO COOL – The recent PCE report showed inflation continuing to cool and near the Fed’s 2% target.