This week marks the beginning of the second half of 2024. It’s also a holiday-shortened week as we celebrate July 4th, Independence Day on Thursday. In the meantime, let’s talk about the mortgage and housing markets as we head into the second half of 2024.
Inflation: A Global Challenge
Inflation remains a top concern for central banks worldwide. Recent hotter-than-expected inflation reports in Canada and Australia led both countries to adjust their rate-cut expectations. This global trend, combined with the Fed’s forecast of persistent inflation here in the U.S., is continuing to keep upward pressure on mortgage rates.
Housing Market Trends
High mortgage rates have impacted housing sales. Existing home prices are still climbing, but at a slower pace, and inventory is finally starting to grow. This could create a more balanced market in the future.
New home sales are facing similar challenges with high rates and builder concerns about construction costs, labor shortages, and land availability.
The Japan Factor
The recent weakening of the Japanese Yen could have ripple effects on U.S. rates. As the world’s largest holder of U.S. Treasuries, Japan may be forced to sell some holdings to support the Yen. This could put downward pressure on Treasury prices and push mortgage rates higher along with the 10-year yield.
A Glimpse of Hope
Despite the recent rate increase, the 10-year Treasury note yield remained below a key resistance level, offering a glimmer of hope for future rate stability. Additionally, Fed Chair Powell has indicated they might cut rates sooner if the labor market shows unexpected weakness.
Looking Ahead: Independence Day and Beyond
This week is a short one due to the Fourth of July holiday, but it offers some high impact data points. The minutes from the last Fed meeting and the upcoming Jobs Report will be closely watched for signs of the Fed’s future direction on rates.
Jobs Report Sandwiched Between the Holiday and the Weekend
The most important economic report of the month comes out on Friday, when many traders will likely be taking the day off for a long holiday weekend. This can often cause out-sized market reactions to data, so we could see some volatility in markets and rates as a result of the following expected Jobs Data. A 189,000 rise in new job creation is the call for growth in June versus a much higher-than-expected 272,000 rise in May.
Average hourly earnings in June are expected to rise for a year-over-year rate of 3.9 percent; these would compare with May’s rates of 4.1 percent on the year, both of which were also higher than expected. June’s unemployment rate is expected to hold unchanged at May’s 4.0 percent.
Mortgage Rates: A Temporary Blip?
While rates have ticked up recently, it’s important to remember that rates naturally fluctuate. The economic data still suggests a potential for downward pressure on rates later this summer. However, average rates for this time last year were only .15 percent lower than in the current rate survey, according to Freddie Mac’s data.
Let’s Chat About Your Homeownership Goals!
Even with the current market dynamics, homeownership is still achievable! I can help you navigate these uncertainties and find the best mortgage option for your needs. Let’s schedule a time to discuss your goals and explore your options.
Wishing you a Happy 4th of July as we celebrate our independence!
