Auto prices have increased rapidly since the pandemic – 45% for used cars and 22% for new cars – but so have auto insurance premiums. Premiums are up 19% year over year (27% since the pandemic) while inflation is closer to 3.7% year over year. Auto Insurance Premiums have increased for 4 main reasons: Drivers are driving riskier since the pandemic (fatal accidents are up), repairs and replacement parts are more expensive, national disasters such as hailstorms and wildfires are causing more damage, and insurers are currently paying out $1.12 for every dollar collected in premiums. Some insurers will lower your premiums if you: bundle with home insurance, install an app that allows them to track driving habits, increasing your deductible, and limiting violations.
Mortgage Rates increased this week as the price of Mortgaged Backed Securities continues to decline. Rates are up 1.25% from this time last year.
Fed Update – the Federal Reserve Board met on the 20th and gave their projections for GDP, unemployment, inflation and their Fed Funds rate. Highlights:
- Fed Funds Rate remained unchanged at 5.5%
- Economic activity expanding at a ‘solid pace’
- job growth slowed slightly but remained ‘strong’ vs ‘robust’ in previous statement
- Forecast: GDP increase in 2023 from 1% to 2.1
- Forecast: Inflation: PCE Inflation increase from 3.2 to 3.3. Core Inflation decrease from 3.9% to 3.7% in 2023.
- Forecast: Fed funds rate at 5.6% (see plot above) with likely one more hike in the next two meetings this year
- Forecast: instead of 4 cuts in 2024 the average prediction is now 2 cuts next year
Existing Home Sales – NAR’s Existing Home Sales Report showed that home sales decreased 0.7% from the previous month and are down 15.3% year-over-year to an annualized pace of approximately 4M. OF the 1.1M inventory approximately 669K of those are actually available when you pull out pending sales. Supply is at 3.3 months and the median price is at $407,100 a 4% year over year increase.
Single Family Rents – CoreLogic reported that single family rents were up 3.3% year over year in July, a 0.2% moderation from the previous report.
Mortgage Applications to purchase homes increased 2% last week and are down 26% year over year. Refinances applications jumped 13% and are down 30% year over year.