Market Minute - Economy and Housing News - Erin Carvelli

  • Inflation fell for the 8th straight month in February, reaching the lowest level since September 2021. It remains higher than the Fed's 2% goal.
  • Although more jobs were created in February than expected, wage growth came in slightly slower, which helps the outlook of reduced inflation.
  • Retail sales fell in February after surging in January, suggesting that consumer spending is slowing down in the face of high inflation.

  • Single-family homebuilding and permits for future construction rebounded in February, offering hope the housing market is stabilizing.
  • Home builder confidence also improved for the 3rd straight month, despite high construction costs.
  • Purchase apps rose 7% last week. We may see an even bigger increase next week after this week’s rate drop. 

Market Minute Report - Mortgage News

Market Minute - Economy and Housing News - Erin Carvelli

  • In his semiannual testimony before Congress this week, Fed Chair Powell signaled a possible higher-than-expected Fed rate hike in March.
  • Job openings declined slightly in January but still far outnumber available workers, as the labor picture remains tight.
  • Labor market strength and strong economic and consumer spending data have pressured mortgage rates higher recently.

  • Despite rising interest rates, mortgage application volume improved 7.4% last week. Purchase apps rose 7%, and refi apps grew 9%.
  • Market analysis from Black Knight suggests purchase activity could be nearing the bottom before a slow and choppy return to normalcy.
  • Home affordability is a growing concern with just 10% of homes sold in Q4 2022 selling under $300K compared to 41% in Q4 2019. 

Market Minute Report - Mortgage News

Market Minute - Economy and Housing News - Erin Carvelli

  • January's manufactured capital goods orders grew by the most in 5 months, ending 2 straight months of declines.
  • Consumer confidence declined in February, as rising prices and growing recession concerns outweighed the near-term strength of the economy.
  • The PCE, a key inflation measure, rose more than expected in January, indicating the Fed has more work to do to bring down prices.

  • Pending home sales jumped 8.1% in January, improving for the second straight month, as mortgage rates fell from 2022 highs.
  • The FHFA reported home prices advanced 6.6% in 2022, showing prices still increased, though at a slower rate.
  • Mortgage application volume was 44% lower than the same week one year ago and is now at a 28-year low due to higher rates in February. 

Market Minute Report - Mortgage News

It's true rising interest rates can make a big difference in your monthly mortgage payment. But interest rates are only one factor in the cost of financing a home. The market changes that typically come with rising rates can be beneficial and even help mitigate higher payments.

Low-Rate Environment vs. Average Rate Environment

Low-Rate Environment

In a low-rate environment, buyers are likely to rush to the market. That creates stiff competition, which can lead to a frenzy of bidding wars and rapidly rising prices.

Average Rate Environment

In a calmer environment, you’re less likely to compete against other buyers. You’re more likely to:

  • Have time to see and compare homes.

  • Negotiate on price.

  • Receive seller concessions, such as a credit towards closing costs or funds to reduce your rate.

  • Enjoy the safety of important contingencies like home inspections and mortgage financing.

  • Avoid making a rash decision you may regret later.

Low-Rate Environment vs Average Rate Environment

In fact, a lower price at a higher rate can be comparable to paying an inflated price at a lower rate. In other words, the real cost of a home today may be no different than it was when rates were lower, but competition was fierce and prices were at a premium.

Lower Price Higher Rates

If you’re comfortable making the payment you secure today, you can have peace of mind knowing your monthly cost will be even easier to make if you’re income rises. And if rates fall, refinancing can help you save even more.

History shows there’s one thing that rates don’t change about the housing market. It’s proven true whether mortgage rates were at their peak, at historic lows, or hovering around their average. Home values tend to rise over time.

We can’t predict the future as populations increase and the amount of buildable land stays the same, it’s likely values will keep going up over time. And when home values rise, homeowners gain equity and build wealth.

Bottom Line:

If you’re considering a move, don’t let rates hold you back. You may be surprised at the tools we have to help you reach your goals, no matter the market. A pre-approval at today’s rate is a great place to start. Reach out when you’re ready.

Market Minute - Economy and Housing News - Erin Carvelli

  • The New York Fed reports consumer debt hit a new record at the end of 2022, while delinquency rates rose for several types of loans.
  • Minutes from last month's Fed meeting showed most officials supported a quarter point hike though "a few” favored a bigger half point hike.
  • Fed officials stated the signs of slowing inflation are not enough to counter the need for more interest rate increases.

  • Existing home sales dropped to the lowest level in more than 12 years in January. The pace of decline slowed, though, raising optimism for a shift.
  • Home purchase applications tumbled last week to the lowest level since 1995, as the highest mortgage rates in 3 months discouraged buyers.
  • Some good news for first-time and low-income buyers: The FHA announced cuts to its mortgage insurance premiums starting March 20. 

Market Minute Report - Mortgage News


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