Another absolutely stunning week last week for mortgage rates. They SUNK LIKE A STONE following positive inflation news.  Last week I was hesitant to say the worst is behind us, but I'm getting more confident that we're past peak of mortgage rates for 2024. 

Anyone interested in buying this summer should start looking to make offers soon. I expect millions of prospective buyers to start coming out of the woodwork (and home prices to start climbing) now that rates are falling fast and "busy season" has arrived.

About 80% of my clients are making offers to buy homes in multiple offer situations AND those homes are going over ask. Have any of y'all experienced the same?! I'd love to know!

Average rate for a 30-year fixed rate conventional loan fell to to 6.922% (down from 7.04%). Make sure you're signed up for our weekly Friday rate texts. It could make a HUGE difference in your homebuying decision. 

Consumers are EXHAUSTED

Retail sales data in April was BAD. Why? Record breaking credit card debt, inflation, slow wage growth and higher unemployment seem to finally be catching up with the economy. All of which is good news for interest rates!

2024 started with a bang for retail sales data, but each subsequent month's reporting has gotten less and less impressive. It's no coincidence that higher retail sales equals higher inflation. The more demand (and the more sales) that occur, the higher the retailers can charge for the product/service. Slower retail sales data in April is a good indicator that inflation data in May will also come in lower.

Inflation is getting Back On Track

After 3 terrible reports, we can all breathe a sigh of relief as the CPI numbers reported last Wednesday came in AS EXPECTED, which is a good as we could have hoped for. On a 12-month basis, however, the CPI increased 3.4%, in line with expectations.

Core inflation was at 3.6%, the lowest reading ex-food and energy since April 2021.

But while that's enough to relieve some concern, it's not enough to get the Fed to cut rates. We need a few more months of great inflation data like this before we'll see the Fed cut the Fed Funds Rate (hopefully by September).

The main inflation concerns remain gas and shelter!  Why the Fed Is So Obsessed With Rent (and the housing market)? Rents account for more than a third of the CPI, making them the single most important factor determining broader inflation readings. And, because we saw such a dramatic increase in home prices from 2020-2022, rent prices have yet to stabilize.  Keeping interest rates higher, and attempting to keep the housing market frozen, is key for the Fed to stabilize rents. Unfortunately for the Fed, home prices continue to rise.

Home Starts Data was GOOD, but not great 

New construction data was mixed in April. Housing starts and permits missed the mark on expectations (Housing starts were 1.36M actual vs 1.44M expected) BUT it was  HUGE increase from March 2024 and year-over-year reporting.

“Home builders continued their shift from building apartments to building single-family houses,” Holden Lewis, home expert for NerdWallet, says. “They broke ground on about 18% more houses in April compared to a year earlier, while starting about 33% fewer apartments.  

I continue to believe that the only way out of this housing mess is to build more inventory, so the more we see home builders continue to start on new projects, the better!