Mortgage Rates and the price of Mortgaged-Backed Securities (MBS) moved sideways this week, ending the week near they started. Rates are down 0.75% from this time last year and just off of 3 year lows.
Inflation – the Fed’s favorite measure of inflation, the Personal Consumption Expenditures, came out for December and it creeped up from previous months. Headline inflation rose from 2.8% to 2.9% and core inflation rose from 2.8% to 3%. We have been in a similar environment with minor fluctuation over the past 12 months.
New Construction – New Home Sales, which measures signed contracts on new homes, was released for both November and December (after shutdown delay) and it came out strong. November rose 15% and after that nice increase December declined by 1.7%. The pace in November and December was the best level of sales in nearly 4 years with December at 745,000. The median new home price is $414,000, up 4.2% from November and down 2% year over year. Supply is listed at 7.6 months but only 123,000 of these homes are actually completed so it is closer to 2 months of practical supply.
Rents – Cotality released their single-family rent index, showing that new rents fell 0.7% in December and year over year they are up only 1.2%. Chicago saw the highest rent groth at 4.8% year over year.
Mortgage Applications to purchase homes fell 3% from last week but are up 8% year over year. Refinances increased 7% and are up 132% year over year.