Wild times we’re living in! Last week’s events including rising inflation, continued geopolitical uncertainty, and the Fed’s move to raise its key interest rate, drove mortgage rates higher at a pace not seen in a long time.
According to Freddie Mac’s weekly survey, which came out last Thursday, the average rate for a 30-year fixed-rate mortgage increased by more than a quarter of a percent.
Yes, I know it all sounds like doom and gloom but in reality this could be the recalibration that the housing market needs to even out a bit. According to data we saw last week, housing demand remains strong but there are just too few homes for sale. So, with rates rising we’re likely to see home price increases moderate and demand slip some, which could calm the frenzy of the home buying experience. That would be nice, right?
As for the economic data coming out this week, it’s Jobs Week with the month’s most important data coming out on Friday. Leading up to that we’ll get the ADP report on private-sector job creation as well as additional inflation and GDP (gross domestic product) data. Overall, it’s a very busy week for markets and we could see further volatility in markets.
We’ll also get a look at important housing data including 2 reports on home price appreciation. The Case Shiller Home Price Index for January was predicted to rise by 1.0 percent with the yearly rate at 18.4 percent, however, the actual rates were much higher, rising 1.4 percent for the month and 19.1 percent for the year.
The companion FHFA House Price Index of homes with conforming mortgages reported a monthly gain of 1.6 percent and annual increase of 18.2 percent.
As for the GDP report, the third estimate for fourth-quarter GDP, at a consensus 7.1 percent, is expected to show little change from the second estimate’s 7.0 percent annualized rate.
ADP’s report on private-sector job creation is predicted to show new jobs of 438,000. Looking back at February, ADP’s estimate for substantial growth of 475,000 in private payrolls compared with even more substantial growth of 654,000 in the government’s data.
On Thursday the Fed’s favorite report on inflation comes out. The PCE Index is expected to show inflation readings will remain severe at monthly gains of 0.6 percent overall and for annual rates of 6.4 percent (versus January’s 6.1 percent).
And finally, Friday we get the monthly jobs numbers. A 455,000 rise in new job creation is the consensus for March. The February number, at 678,000, surpassed the high estimate for a second straight month. Average hourly earnings (wage inflation), which in contrast to payroll growth eased in February, is expected to accelerate to 5.5 from 5.1 percent.
We also expect to see the unemployment rate drop slightly to 3.7 percent and the workforce participation rate increase a little to 62.4.
I’ll be keeping an eye on all of it for you so reach out as you consider your next purchase. This is still a great time to consolidate higher-interest debt by refinancing. Interest rates are rising across the board, including revolving debt, so put yourself and your family in a more healthy financial place by clearing out any debt that’s charging you higher rates. Why wouldn’t you?
P.S. Did you hear we opened a branch in Colorado?!! As you may know, Colorado is where I was born and raised so my roots here are deep and we are so excited to now be able to offer full-service home financing in my home state! So, please spread the word to your friends and family! If there are any contacts you have in Colorado that you think I should know, please send them my way. You can reach me by calling/texting 818.307.6072, or replying to this email. I look forward to serving you in Colorado!
