A big Fed Meeting this week had traders and markets holding their collective breaths. The latest inflation readings show consumer prices increasing at the smallest rate in more than two years. Analysts were hopeful that the Fed would pause their rate increases, which they announced today they would pause interest rate increases. Mortgage rates barely budged so far as a result of the news.
The Fed Chair, in his press conference, also commented that the members have not decided about future rate hikes and will be monitoring how the data unfolds as a result of the pause and decide their next move. As we know, it usually takes a few months to see how policy changes affect the economy and inflation levels. We’ll wait and see how this uncertainty may affect mortgage rates in the coming weeks.
Also, we’ve got two important inflation reports coming out this week. The Consumer Price Index (CPI) showed that core prices in May did not slow at least on the month, holding steady instead at April’s elevated 0.4 percent monthly increase. But the core’s year-over-year rate showed easing, to 5.3 from 5.5 percent. Overall prices eased and substantially, to 0.1 percent on the month from 0.4 percent and to 4.0 percent on the year from 4.9 percent.
What I found interesting in the CPI report is that rents rose 0.5 percent last month, up 8.7 percent for the year
Inflation figures for the wholesale sector come out on Wednesday also. After rising 0.2 percent in April, producer prices in May are expected to fall 0.1 percent. The annual rate in May is seen at 1.6 percent versus April’s plus 2.3 percent.
As for the housing market, Zillow released a report this week that home sales rose nearly 10 percent from April to May and inventory continued to tighten. Homeowners that don’t have to sell are holding on to homes and their low-interest rates. But those that do sell are being rewarded with multiple offers and higher sales prices.
This scenario is curious to me…if it’s possible to get a sales price for your home that negates the higher interest rate, could it be worth it to sell? Of course, every scenario is different, but if you’re considering selling, let’s run the numbers and see. You can simply send me an email or call/text me at 818.307.6072.
One way to avoid the interest rate drama is to pay cash for your next home and according to the latest report released by Redfin, 33.4 percent of purchases in April were made in cash. This figure is up from 30.7 percent a year ago. The increase in cash purchases is being attributed to higher interest rates deterring some buyers that use financing for their home purchases.
I’ll be keeping an eye on all of this for you and will report back next week!
