First, I want to let you know how thankful we at Pacific Financial are for you and grateful to be part of your life. Please know that we are here to serve you on your journey through home financing, however we can. I hope you have a wonderful Thanksgiving surrounded by those you love most.
Now, on to the rest of the story…The killer combo of rising inflation and consumer spending drove mortgage rates slightly higher last week, according to Freddie Mac’s latest survey of average rates. Data is also showing a strong housing market with demand remaining high even though rates have gone up and inventory continues to be tight.
Yes, this looks to be the best of times and worst of times for home buyers as it is hard to buy a home now with 60% of transactions involving multiple offers and mortgage rates have risen some. But it remains worth the effort as it is the best of times with home appreciation expected to remain in double digits for the next 12 months.
This is a holiday shortened week due to the Thanksgiving holiday so all of the market data I’ll be watching comes out before Thursday. So far, we saw existing home sales topping expectations. Sales rose 0.8 percent in October to 6.34 million after 6.29 million in September.
New Homes Sales numbers come out on Wednesday and monthly volatility aside, sales of new homes have been trending higher. The general consensus for October is an annual rate of 790,000 which would compare with an 800,000 rate in September.
And finally, the Fed’s favorite inflation index, the PCE comes out on Wednesday as well. As we see the trend for higher inflation continue, this report will be highly impactful for markets and is likely to cause some volatility in rates.
Inflation readings are expected to accelerate to monthly gains of 0.6 overall and 5.0 for annual rates – versus September’s 4.4 percent. These readings continue to cause concern in markets and I’ll be keeping an eye how the on the 10-year Treasury yield performs. The further it strays from 1.60 percent, the more likely we’ll see rates rise.
Have a very happy Thanksgiving and I’ll see you next week!