As we’ve seen mortgage rates continue to drop, now, for the fifth week in a row, buyers are beginning to come back in the housing market, as reflected in the rise of applications for new mortgages.
Signs are also showing up in the wider market to support mortgage rates improving, like the 10-year Treasury yield – which ebbs and flows with mortgage rates – has dropped .75 percent in November alone.
So, what’s driving these market moves? For one, inflation is easing, which in turn means the Fed will lay off increasing its interest rate. And if inflation continues to fall for several months and the economy slows, the Fed could start lowering the policy rate.
And as the data continues to come in, inflation continues to improve. In fact, the PCE Index, the Fed’s favorite inflation gauge, came in at 3.5 percent year-over-year, the lowest level in a couple of years. Yes, it’s above the 2 percent ceiling the Fed likes to see it, but the trend is headed in the right direction.
All that being said, now is a great time to consider a home purchase, if that’s been on your mind. The flood of buyers we expect due to pent up demand has not entered the market en masse yet, but believe me, they will be back and likely increase competition and, eventually, home prices. So, now could be a sweet spot for savvy buyers! Reach out to me if you’d like to explore your options. You can email me or call/text me at 818.307.6072.
As for what else I’m watching this week…
This Friday, the monthly Jobs Report will be released, and starting Wednesday, all the ancillary employment reports leading up to it.
First, the ADP Employment Report tracking the creation of private sector jobs will be released Wednesday. Forecasters see ADP’s November employment number rising 123,000. This would compare with October’s growth in private payrolls reported by the Bureau of Labor Statistics of 99,000, much lower than 246,000 in September. ADP’s number for October was 113,000.
Friday’s Jobs Report is predicted to show a 180,000 rise in new job growth for November versus 150,000 in October, which was on the low side of expectations and reflected a 33,000 drop in motor vehicle manufacturing tied to a labor strike.
Average hourly earnings in November are expected to rise 0.3 percent on the month for a year-over-year rate of 4.0 percent; these would compare with 0.2 and 4.1 percent in October which were roughly as expected. November’s unemployment rate is expected to hold unchanged at 3.9 percent.
I wish you a great rest of your week!
