The first half of May and the back half of May told 2 different stories. Rates fell fast and hard during the first half and have since been going back up. 

We are back to being just above a 7% average rate for a 30-year fixed rate conventional loan.  Make sure you're signed up for our weekly Friday rate texts. It could make a HUGE difference in your homebuying decision. 

 

The GOOD news - Inflation reporting from last Friday caused a nice drop in rates after showing that inflation is still staying in line with expectations.

Home Prices hit a record high (again)

The S&P Case-Shiller home price index for March released last week. Prices across  20 major cities rose 7.4%, up from 7.3% annual gain last month with both indices reaching “another all-time high,” said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones in a release.

We continue to see the effects that low inventory are having on home prices despite the "higher for longer" interest rate environment. As I said a couple weeks ago, we are seeing many of our clients miss out on homes because of unexpected bidding wars. There just aren't enough homes out there to meet the demand that currently exists and that's driving prices higher. 

Nationwide Pending Home Sales In April Plummet

To their slowest pace since April 2020 (that's prime time pandemic levels). BUT don't panic!

If you're like me, you're probably a little baffled by this number because in places like Austin and Houston are up (2.5% and 10.3% respectively) while cities like Denver are flat! It's important to keep in mind that this is a NATIONAL figure. 

Sales fell the hardest in the Midwest and West. It's critical to understand how your local market is operating. The housing market does not move uniformly throughout the country and if you don't dig into the local numbers, you could cost yourself a lot of unnecessary stress (and money).

Inflation Data Met Expectations

Everyone got to breathe a sigh of relief as another inflation report came in line with expectations. The Personal Consumption Expenditure (PCE)  Index rose 0.3% and 2.7%, respectively, in line with estimates.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased by 0.2%, down from a 0.7% rise in March.

The bad news is that we appear to be stuck in this 2.7%-2.8% range, unable to go any lower. Take a look at the graph below to see what I'm saying. In order for the Fed to cut rates, they need to be CONFIDENT that we are heading down to 2%. Staying stuck at 2.7% just doesn't give that confidence.

We will see what happens as the months continue to go by. As of now, September 18th is still the first possible day we may see a rate cut. But, our regular readers know not to get their hopes up too high as we've seen this date continue to get pushed back throughout 2024.