April 17 - Mortgage Spotlight | Persistent Inflation and Banking Relief Push Rates Higher
Updated: Apr 23
A NOTE ON THE WEEK
Persistent inflation and recovered bank stocks pushed rates back to 7%. The market story isn’t the rates, it is low inventory. Inventory dropped 1.3% again last week. The seller’s strike continues. The interesting counterpoint is that buyers are back in the market. Since November, purchase applications are mostly up on a week-over-week basis. The short-term objective is to move quickly with your qualified buyers and make sure they are fully pre-approved. Home values are ticking up in most markets, this could be the last chance to catch a seasonal price bottom. Long term, we need to prepare for a lower inventory environment. It will take a significant rate shift to unlock new sellers. Jesse
SCRIPT OF THE WEEK
Prepared Buyers Win “The seller strike continues, meaning very few homes are for sale. That means more competition for homes, and values are trending up. Winning in this market means being prepared. We are helping our buyers get fully pre-approved and make offers that get accepted."
The Market is Moving… Just Not the Direction Wanted Last week Consumer Price Index came in slightly below expectations. The market reaction was muted. Inflation, while declining, is still persistent. Several other economic reports indicate that the economy is far from faltering. Today, the manufacturing sector had its strongest showing in several months. The other force we didn’t expect is the rapid turnaround of the banking sector. Bank stocks recovered last week after a scary start to the year. The combination of persistent inflation and banking relief has led to higher rates. Now we look to the Fed’s May meeting. The consensus is that they will raise rates another 0.25%. Upward pressure on rates will continue until we see specific signs of economic weakness.
FOR YOUR BUYERS
You can copy and paste this note and send it directly to your buyers. You will also see this on social and as a forward-able email on Thursday so you can engage your buyers before the weekend! It Could be More Expensive To Wait
We saw another very light week for new homes coming on the market. We have 50% fewer homes for sale this week than during the same period in 2017-2019. What impact does this inventory have on potential home buyers? If you read the headlines, you know that most experts are projecting slightly lower rates at the end of the year. Many homebuyers are sitting on the sidelines, waiting for lower rates. But there could be a cost. With fewer homes for sale, most markets will likely see prices ticking up. According to Altos Research, the median list price for houses increased in the last few months. You must understand what is happening in your market to make the best home-buying decision possible. The other thing to remember is that most of the data you see about home prices is based on homes that closed last month or months ago. This spring is unique because of the rate drops and lack of inventory; things are changing quickly. Happy Househunting!