Wishing everyone longevity, fortune, good food, and time with the family over the holidays!
Mortgage Rates – remained unchanged this week as the price of Mortgaged Backed Securities had a remarkably stable week. Rates are at the best levels we have seen since June and are up about 0.5% from this time last year.
Inflation – the Personal Consumption Expenditures (PCE) index showed inflation came down more than expected in November – headline inflation fell 0.1% month over month and year over year the reading declined 0.4% to 2.6%. This is the Fed’s favorite measure of inflation and a good sign for mortgage rates. The core rate, which strips out food and energy fell 0.3% to 3.2% year over year. If you annualize the previous 6 months of readings inflation is down to 1.85% which is below the Fed target of 2.0%
Home Sales – rose nearly 1% in November to a 3.82M annualized pace. This report breaks a 5-month streak of declining reports. Year over year sales declined 7.3%. Inventory remains tight and declined by 1.7% from last month to 1.13M. There is a 3.5 months’ supply of homes, and a 4.6-month supply is considered normal. The median home price declined 1% to $387,600 in November but is up 4% year over year. Homes average 25 days on the market and 62% sell in 30 days. First time home buyers account for 31% of sales, cash buyers 27% and investors 18%.
Rents – Core Logic’s Single Family Rent Report showed that rent prices increased 2.5% year over year, a moderation of 0.1% from last report.
GDP – the final reading of Q3 GDP showed the US economy grew at a 4.9% annualized pace, a revision from the previous reading of 5.2.%. This shows Q3 was a strong quarter, but not quite as strong as original estimates. The market is now predicting an 83% chance the Fed will start cutting rates at the March 20th meeting.
Mortgage Applications – to purchase homes rose 3.5% from last week and are down 15% year over year. Refinance apps fell 1.8% after jumping 19% in the previous report.