Mortgage Rates and the price of Mortgaged-Backed Securities worsened significantly this week, nearly erasing six weeks’ worth of gains in two days. Bonds reacted unfavorablyto inflation reports and it is now Fed Futures is pricing a 100% change of a 25bp hike and a 10% chance of a 50bp hike in December. Mortgage Rates are up about 1.125% from this time last year.
Home Sales – the National Association of Realtors (NAR) released their Existing Home Sales Report and it showed a 5.5% decline in October. The annualized pace is at 3.75M units, the lowest reading since 2010. Homes are now averaging 35 days on the market while inventory is up 1.3% to 1.6M units (5% year over year increase). The median home price is $416,700.
Inflation – the Bureau of Labor and Statistics (BLS) released their Consumer Price Index and it showed that headline inflation rose 0.4% in September. The core rate, which strips out food and energy, also rose 0.3%. The year over year numbers are not available because the government was shut down during this report last year, but the core rate is in a similar area while the headline number is a full 1% higher. This shows how much the price of oil is impacting inflation.
Mortgage Applications to purchase home rose 8% from the previous week (from a low reading) and refinance applications rose 5%. Year over year purchase activity is down 18% and refinance activity is down 57%.
Oil Futures – crude oil futures are down to 88.93a decline of 1.5%