The market has been NERVOUS over the last 8 weeks - and for good reason - as inflation seemed to be coming back and the Fed rhetoric was shifting to not only talks of no rate cuts but rate hikes.

Luckily, that all changed last week as a calm Fed and a cooler labor market allowed rate cut confidence to re-enter the chat.

Average rate for a 30-year fixed rate conventional loan plummeted in the back half of the week. Falling to 7.08% (down from 7.22%). The largest one week drop this year. Make sure you're signed up for our weekly Friday rate texts. It could make a HUGE difference in your homebuying decision. 

Let's look at some of the big news that came out last week.

Powell delivers a punch during the Fed Meeting

The Fed decided to leave the Fed Funds Rate at current levels again (no surprise there). But, EVERYONE was on the edge of their seat to listen to what Powell had to say during the Fed Press Conference after the rate decision and he did not disappoint.
 
A couple of key positive points from the press conference:

1. While inflation is stickier than they expected, there's NO plans to hike rates. We can all breathe a collective sigh of relief.

2. The Fed believes the labor market is slowing (and they're right - more on that below).

3. The Fed is going to slow down the rate of reducing their balance sheet (creating a less restrictive Fed policy which will help keep interest rates a bit lower).

Unfortunately, it wasn't ALL sunshine and rainbows during his speech. He did reiterate what we've been saying for some time, which is that rates will remain higher for longer as they combat inflation.

He ALSO confirmed that 3 rate cuts is becoming increasingly more unlikely because it's taking a longer amount of time for inflation to start to fall again and we're running out of time this year. There are only 5 Fed Meetings left this year so we need to see some dramatic improvement to inflation before the September 18th meeting to hit the 3 rate cut target that was set at the end of 2023.

The Labor Market Is Starting To Show Its True Colors

The labor reports this year have been unbelievable. With layoffs being announce left and right, it's hard to imagine that job growth can continue at the rate we saw in January, February, and March.

Lucky for homebuyers, it looks like the labor market is finally reflecting reality. Job gains reported at the lowest level in the last 6 months and was much lower than expected (175k actual vs 240k expected). 

The unemployment rate kicked back up to 3.9%!

Rates fell on the news. Powell was right. The labor market is cooling and a cooler labor market is good news for inflation and even better news for homebuyers looking for lower rates. 

Home Prices Continue Higher

The Case Schiller Home Price Index released February data last week. Home prices in February jumped 6.4% year over year, according to the S&P CoreLogic Case-Shiller national home price index.

“Following last year’s decline, U.S. home prices are at or near all-time highs,” said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices. “For the third consecutive month, all cities reported increases in annual prices, with four currently at all-time highs: San Diego, Los Angeles, Washington, D.C., and New York.”

Keep in mind that supply is still tight in many parts of the country and so any good homes, priced appropriately,  are getting snapped up by the demand (even the demand at these interest rate levels).

Light news week ahead..

Last week was the first time I felt really encouraged about the direction of interest rates in months!

I'm hopeful the trend of lower rates continues this week before the big inflation numbers for April get reported next week.