MARKET MOVING NEWS THIS WEEK | |
Get ready for a rollercoaster week as the financial world braces for some major events that could significantly impact mortgage rates. Here's what's you need to know:
Geopolitical tensions add an extra layer of uncertainty. The way all these factors are coming together at once makes this week is a potential game-changer. In the housing sector, expect headlines to be shared with the Fed as data on home appreciation and housing finance are released. The Fed will also have updates on job openings, private payrolls, unemployment claims, nonfarm payrolls, and the unemployment rate will be closely watched, highlighting the interconnectedness of the housing and labor markets. The Fed's meeting, starting Tuesday, will be in the spotlight, with market participants eagerly awaiting the Monetary Policy Statement and Powell's press conference. Investors will be hanging on every word for insights into the timing of potential rate adjustments later in the year, which could have a direct impact on mortgage rates. If you want to see a dip in mortgage rates, you’re looking for Jerome Powell to confirm they still anticipate a rate cut this year. If he chooses to take the current data showing inflation on the rise as a reason to hike again, the market will have a strong reaction.
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Inflation Remains Stubbornly High
The latest economic data paints a mixed picture. March's Personal Consumption Expenditures (PCE) data showed headline inflation rising 0.3% from February, with the year-over-year reading increasing from 2.5% to 2.7%. Core PCE, the Federal Reserve's preferred inflation measure, also rose 0.3% monthly but held steady at 2.8% year-over-year, still above the Fed's 2% target.
Despite the Fed's aggressive rate hikes over the past year, inflationary pressures persist, raising questions about future policy actions.
Housing Market Shows Resilience
On a positive note, the housing market exhibited resilience in March. New home contract signings rebounded 8.8% to their highest level since September, indicating robust demand. Existing home pending sales also surged 3.4%, surpassing expectations and suggesting a promising outlook, especially with the potential for increased inventory and lower mortgage rates.
However, the initial reading of first-quarter GDP growth at 1.6% fell significantly below expectations and the previous quarter's performance, fueling concerns about overall economic expansion.
MARKET EXPECTATIONS: RATE CUTS | |
Market expectations for Fed Funds Rate:
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Sellers Optimistic as Peak Season Arrives
As the prime selling season of late spring and early summer approaches, sellers are feeling optimistic. Low inventory levels are still giving sellers a strong position in most markets, despite higher mortgage rates.
This period typically sees a surge in buyer demand, but with limited homes available, favorable conditions for sellers emerge. Homes listed during this time tend to sell faster and at higher prices, prompting more sellers to list their properties.
Buyers Adjusting to Higher Rates
Despite mortgage rates hitting their highest level since November at 7.5% in April, an increase of 70 basis points from last year, home purchase applications rose by 5%. However, after three weeks of rising rates, mortgage applications are down just under 1% since last week.
While homebuyers are adjusting to higher rates, affordability remains a concern as headlines highlight rising inflation and the potential for rates to remain "higher for longer," leading to a decline in overall demand.
Not all buyers are losing hope. Homeownership is important, and should be a top priority for anyone with the means to buy.
Although the pace of appreciation could slow down, there’s no crash in sight |
Thank you for taking the time to read our market updates. Until next week, friends!