Housing Market Update | Week of January 13th

Last week’s labor data exceeded many expectations and has pushed mortgage rates slightly higher to start the week. This week will give us more context into the overall health of the economy with the Producer Price Index (PPI) and Consumer Price Index (CPI) giving us our first look at inflation in 2025. One positive story that deserves attention has been the consistent growth of single-family housing inventory. This week, inventory is up 24% compared to this time last year. This provides significant advantages to active buyers as higher inventory means less competition, more room for negotiation, and higher likelihood of price reductions on active listings. It’s important to remind our clients of the benefits of buying in this kind of market: there are deals to be found and ultimately, they should focus on their monthly payment rather than their mortgage rate. Last Week's Mortgage Rate Recap Rates Increased Labor data has long been a primary focus of the Federal Reserve when it comes to their monetary policy. Last week provide us with all four major labor reports, including the Bureau of Labor Statistics (BLS) jobs report. Overall, the data outpaced expectations, with 256,000 jobs created and the unemployment rate falling from 4.2% to 4.1%. This data sent the 10-year higher and mortgage rates followed. This Week's Mortgage Rate Forecast Rates Should Be Steady This week is inflation week, with the PPI and CPI reports to be released on Tuesday and Wednesday, respectively. We will also get a pulse on consumer spending with the retail sales report on Thursday. What might be the most important piece of data will come on Thursday and Friday with the home builder confidence index, housing starts, and building permits. While the data was positive in December, the labor market has trended lower over time. Higher mortgage rates are likely to impact residential construction; if those construction worker jobs decline, it could have a significant impact on the overall health of the labor market. Finally, we will hear from several Fed Presidents ahead of next week’s Fed Meeting. Any tone shift regarding the Fed’s monetary policy for this year could impact the 10-year and mortgage rates. As we connect with clients this week, it's important to remind them about the benefits of buying in this market. As I said earlier, inventory is up, but overall demand is down. That means that our ready homebuyers have plenty of opportunities to negotiate or secure a hefty price cut on a home they love. Reach out to a UMortgage Loan Originator to help answer any housing-related questions you may have!

Last week was a wild one for mortgage rates. Although the Federal Reserve announced that they would not be cutting the Federal Funds rate in their May meeting, they did announce that they are tapering their balance sheet reduction. This, combined with weak labor data sprinkled at the end of the week, saw mortgage rates drop at the end of the week. Last Week's Rate Recap: Rates Dropped Slightly Last week, the Federal Reserve held its May meeting. While they decided against cutting rates, Jerome Powell, Fed Chairman, held a dovish stance on the possibility of rate cuts in the future. Last week’s labor reports also showed a softening in the jobs market which caused rates to drop quickly at the end of the week. While it’s still unlikely that we see a rate cut in the Fed’s next meeting, a weakened labor market will be the key to seeing rates drop as the year goes on. This Week's Rate Forecast: Rates Should Stay Steady After the flurry of data and insight from last week’s jobs reports and the Federal Reserve meeting, we have a quieter week ahead without much data for the market to digest. Following a steep drop to the 10-year yield at the end of the week, market analysts will have a careful approach to instill some stability throughout the week. Overall, we should expect to see some steadiness throughout the week. If you want a more comprehensive overview of the market’s reaction to the Federal Reserve meeting and labor data last week, check out a replay of today’s Special-Edition Monday Market Update. Our two hosts offered plenty of insight behind these rate movements and some tactical advice to help you use these pieces of market data to better serve our homebuyers.