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Market Minute - Economy and Housing News - Erin Carvelli

  • Minutes from last month's Fed meeting show officials were divided on the topic of pausing policy rate hikes at the June meeting.
  • Concerns about the U.S. defaulting on debt payments dominate headlines. A default could be devastating for rates.
  • Unemployment claims were revised lower for a 2nd week after fraud was detected. A strong labor market could support a Fed rate increase.

  • Pending home sales remained steady in April, after dropping in March. Sales were down 20% from last year due to the lack of inventory.
  • Builders are attempting to abate the shortage. April new home sales jumped 4.1% for the month and 11.8% for the year to a 13-month high.
  • Purchase mortgage applications were down 4% for the week and 30% year over year due to rate increases. Refi apps also fell. 

Market Minute Report - Mortgage News


Market Minute - Economy and Housing News - Erin Carvelli

  • Retail sales increased in April for the first positive reading since January. They still fell short of expectations, as consumers struggled with inflation.
  • Unemployment claims fell by the most since 2021 after fraudulent claims in at least one state boosted the previous week’s numbers.
  • Total consumer debt hit a fresh new high in the 1st quarter of 2023, at just over $17 trillion. Debt increased in all categories.

 

  • New mortgage originations, including refinances, totaled just $323.5 billion for the 1st quarter, the lowest level since the 2nd quarter of 2014.
  • Despite strong demand, April’s existing home sales fell 3.4% for the month and 23.2% year over year. Tight inventory remains a problem.
  • However, April's single-family building permits increased 3.1% to a 7-month high, while single-family housing starts rose 1.6%. 

 

Market Minute Report - Mortgage News


Market Minute - Economy and Housing News - Erin Carvelli

  • Consumer inflation continued its slow-but-steady deceleration last month to the lowest level since April 2021, slightly better than March.
  • Wholesale inflation is also cooling, coming in better than expected. Producer prices increased at the slowest pace since early 2021.
  • The labor market is showing signs of fatigue as well. New unemployment claims hit a 1-1/2-year high. Continuing claims also rose.

  • According to NAR, home prices are still rising in most areas of the country. However, prices fell in 31% of metro areas, some as much as 10%.
  • Purchase mortgage applications rose 5% last week despite still being lower than a year ago. Refi apps were up 10% for the week.
  • A recent BOFA survey reports that 58% of millennials are homeowners. Of those who don’t yet own a home, 66% plan to buy within 2 years. 

Market Minute Report - Mortgage News


Market Minute - Economy and Housing News - Erin Carvelli

  • The Fed raised its policy rate by 0.25% this week. This 10th consecutive hike puts the rate above 5% for the first time since 2007.
  • Job openings fell more than expected in March to the lowest level in nearly two years, a sign the job market is loosening.
  • Applications for unemployment benefits also rose by the most in six weeks, while continuing claims fell by the most since July.

  • Purchase mortgage applications dropped 2% last week and were down 32% from a year ago. Tight inventory continues to hamper sales.
  • However, mortgage applications to refinance were up 1% on the week, despite being down 51% from the year before.
  • Overall construction spending was up in March, although single-family homebuilding remained depressed amid higher mortgage rates. 

Market Minute Report - Mortgage News


Market Minute - Economy and Housing News - Erin Carvelli

  • The Consumer Price Index's annual inflation rate dropped for the 9th consecutive month in March, reaching its lowest level since May 2021.
  • Wholesale inflation also fell in March, hitting its lowest annual level since January 2021. Slowing inflation can be good for rates.
  • Newly released minutes from the Fed's last meeting indicated officials appear on track to raise policy rates one more time in May.

  • Purchase mortgage applications rose 8% last week, as buyers took advantage of a dip in interest rates.
  • Realtor.com reports a 44% increase in active listings over last year, though the rate of growth had slowed with last week’s report.
  • Despite moderating rate increases, only 20% of consumers surveyed by Fannie Mae in March thought now was a good time to buy a home. 

Market Minute Report - Mortgage News


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