Housing Market Update | Week of February 17th

Last week was a rollercoaster week for mortgage rates, but we came out of the other side with lower rates thanks to Thursday’s PCE inflation report and a particularly low retail sales report on Friday. The week ahead should be quieter: the biggest headlines will come from multiple Federal Reserve members speaking throughout the week, a housing starts report on Wednesday morning, and our weekly initial jobless claims report on Thursday. If we see any significant movements, it’s most likely to be caused by Thursday’s jobless claims data amid recent government layoffs. Last Week's Mortgage Rate Recap Rates Dropped Mortgage rates and the 10-year were both all over the place last week. Volatility started with a higher-than-expected Consumer Price Index (CPI) report on Wednesday; according to this report, overall inflation rose by 0.5% in January. Just when rates looked like they could climb even higher, Thursday’s Producer Price Index (PPI)—which shares many components with the Fed’s favored Personal Consumption Expenditures (PCE) inflation report—showed signs of softening, boding well for future inflation reports. However, Friday's retail sales report decisively made mortgage rates fall. Markets expected a 0.1% decline in retail sales, but the actual figure came in at a whopping 0.9% drop. This indicates that many consumers have reached their limits with credit and that a weaker economy could be on the horizon. When the data shows a weakening economy, the 10-year yield and mortgage rates drop. The labor market will need to continue to weaken for rates to drop more significantly, hence the importance of the weekly jobless claims report released every Thursday. This Week's Mortgage Rate Forecast Rates Should Be Stable We saw some unexpected volatility last week, with rising inflation appearing to start to impact consumer spending. This week should be a little quieter. We have Federal Reserve Presidents speaking throughout the week; depending on what they say, we could see the markets react to their comments. Additionally, the spotlight is starting to shine more heavily on Thursday’s weekly jobless claims report because of recent widespread layoffs. As seen last week, things can change quickly. Make sure to stay in touch with your UMortgage Loan Originator throughout the week for periodic updates as the market reacts to these headlines and data.

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.