Fortunately, we did not see bond markets react too drastically over last week’s inflation report revealing prices at the consumer level have increased 7 percent, outpacing wage increases. You’d have to go back 30-40 years to see inflation at these levels! And, we’re expecting it to continue at least for the next couple of months before leveling off.
Yes, mortgage rates continue their march higher, last week as well, according to the weekly rate survey published by Freddie Mac, but it could’ve been worse. It appears that lots of foreign investors are flooding our bond market with funds because our market is offering higher returns than in other parts of the world. So, this influx helped buoy the bond market, despite a tough inflation environment.
What I’m watching now…
This week, we will likely see some continued up and down movement in markets as lots of housing data comes out. Fears of the future of the sector are running higher with questions of whether or not there’s a bubble, interest rates are rising, as are home prices, even as inventory remains tight. I’ll be particularly interested in seeing the existing home sales numbers.
We started out the holiday-shortened week with a look at the Housing Market Index, a measure of sentiment among home builders. The index added another point in December to a very favorable 84 which is where it was expected to hold in January but we actually saw a small drop to 83.
Next up is the report on New Housing Starts and Building Permits, a leading indicator for housing which gives us a peek into where inventory and then sales will be in the coming months. A 1.650 million annual rate is expected for December starts slightly less than 1.679 million in November which was higher than expected. Permits are predicted to remain rather steady.
As for Existing Home Sales, driven perhaps by expectations that mortgage rates were at lows and would begin to move higher, sales have climbed the last three reports, to a 6.460 million annual rate in November. December’s expectations are a small step lower to 6.400 million, which means a 2.0 drop in the year over year rate.
As always, I’m available to answer any questions or help you with your home financing, whether a first home, second home, or investment property. Reach out today!
