Powell was referring to the current situation in which homeowners holding historically low rate mortgages aren’t feeling incentivized to sell their homes, reducing the number of properties available in the market. A Federal Housing Finance Agency research paper published in March 2024 shows that nearly all 50 million active mortgages have fixed rates, and most [...]read moreWhen will the Fed’s moves alleviate the lock-in effect?
As expected by virtually all market participants, the Federal Reserve maintained its short-term policy interest rate between 5.25% and 5.5% at its June meeting that concluded Wednesday afternoon. That’s the seventh consecutive time policymakers with the Federal Open Markets Committee (FOMC) kept the rates unchanged, reflecting mixed signals from the leading U.S. economic data. Job [...]read moreFed holds rates steady amid mixed economic signals
Before the Fed held its press conference, we got a softer-than-anticipated CPI report, which sent the 10-year yield (and mortgage rates) lower at first. Then, the Fed announced its policy and bond yields headed higher as Powell spoke. However, the 10-year yield finished the day lower. We have had some wild moves on key data [...]read moreInflation and Fed day: A crucial moment for the housing market
The BLS jobs report shows the honey badger labor market woke up and once again chose violence this morning. Not only did headline jobs beat estimates, but negative revisions were minor and wage growth picked up. This is obviously negative for mortgage rates, as bond yields were close to breaking a key technical level but [...]read moreWhat we should learn from the jobs week data
When single-family permit demand collapsed in 2022, we still had a healthy backlog of homes that needed to be finished. While that was happening, we also had 5-unit permits expand as well. Well, that isn’t the case anymore, as 5-unit permits are already at COVID-19 recession lows and now we have seen some softness in [...]read moreWhat the new home sales report shows about labor market risk
Today, the CPI inflation data missed estimates slightly, meaning it is just a bit cooler than what people were looking for, so bond yields went down right after the report. Below: U.S. core CPI inflation inflation, running at 3.6% year over year From BLS:The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent [...]read moreWhy jobs data is more important than inflation for lower mortgage rates
So where does this leave us? Let’s look at my labor economic model that started on April 7, 2020, and see where are we today. 1. The current state of the labor market results from a series of events, with COVID-19 being a significant catalyst. I wrote the COVID-19 recovery model on April 7, 2020, [...]read moreLabor market report is good news for mortgage rates
The U.S. economy added 175,000 jobs in April, less than in March and below what economists had expected. April’s rate also fell below the average monthly gain of 242,000 over the prior 12 months. Meanwhile, the change in total nonfarm payroll employment for March was revised up by 12,000, from 303,000 to 315,000, according to [...]read moreU.S. hiring slowed in April, missing estimates
The Federal Reserve’s Federal Open Markets Committee (FOMC) maintained its short-term policy interest rate steady at a range of 5.25% to 5.5% for a sixth consecutive meeting on Wednesday. “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward [...]read moreFed holds rates steady for the sixth straight time
Industry experts believe mortgage rates will remain higher for longer, attracting borrowers who face life events but not “economic gamers“ to the mortgage market. In turn, this will force some lenders to think out of the box to attain profitability. On Wednesday afternoon, the Federal Reserve announced its decision to maintain its short-term policy interest rate at a [...]read moreRates at 7% attract different types of borrowers, forcing lenders to rethink profit strategies