Hope you’re having a great week! Lots happening in the markets. My purpose with this newsletter is to keep you informed about what’s happening in the market, even when things get a little bumpy. This week, we saw some mixed signals, so let’s break it down.
Recent data revealed inflation reared its head again with a surprise jump in January’s consumer inflation number (CPI). This spooked the bond market and caused a temporary uptick in interest rates. While concerning, it’s important to remember that these numbers are backward-looking, and the market is always trying to predict the future. Plus, the Fed is focused on a slightly different inflation measure, which is currently closer to their target.
Freddie Mac reported the 30-year fixed mortgage rate averaged slightly down from last week, which is encouraging! Sam Khater, Freddie Mac’s Chief Economist, even noted that purchase demand is stronger than this time last year, hinting at a potential thaw in buyer activity. However, this week’s volatility due to the inflation report and the President’s Day holiday has pushed rates back up a bit. The good news is that even with the recent jump, rates are still near the lowest we’ve seen in nearly two months.
We’re also seeing a bit of a slowdown in home contract activity. It seems some buyers and sellers are taking a “wait-and-see” approach, hoping for more clarity on rates and the economy. This “uncertainty,” as Bright MLS calls it, is understandable. While there’s definitely pent-up demand, affordability challenges are causing some to postpone their plans. But remember, I’m here to help you navigate these challenges!
Looking ahead, we’ll be watching for the Fed meeting minutes and any news on tariffs. Lower oil prices, partly due to economic struggles in China, could ease inflation and potentially lead to lower rates. It’s a complex picture, but I’m keeping a close eye on all the moving parts.
As for housing data, the Housing Market Index revealed builder sentiment has turned less optimistic dropping to 42 from 47 in February after firming to 47 in January from 46 in December. The report on Housing Starts and Building Permits is predicted for January at a 1.397 million unit rate, down from 1.499 million in December as the market deals with mortgage rates near 7 percent. Permits are seen slightly lower at a 1.470 million unit rate in January versus 1.483 million in December.
And finally, the report on Existing Home Sales is predicted down a bit at an annual rate of 4.16 million units in January after rising more than expected to 4.24 million in December from 4.150 million in November.
As always, please don’t hesitate to reach out if you have any questions or want to discuss your specific situation. Whether you’re thinking of buying, selling, or refinancing, I’m here to guide you through the process.
