Consumer Housing Sentiment Reached 30-Month High. The September HPSI, released This Week in Real Estate, reflects consumers’ current views and future expectations of housing market conditions. The index has increased by 9.4 points compared to the same period last year. Additionally, inflation has dropped to its lowest level since early 2021. The U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) for September decreased by 0.1 percentage point from August, resulting in a year-over-year increase of 2.4 percent, the smallest annual rise since February 2021. On an annual basis, shelter costs rose by 4.9 percent in September. Although rising housing costs significantly contribute to overall inflation, the annual rate of shelter inflation continues to decelerate, down from 5.2 percent in August and significantly lower than its peak of 8.2 percent in March 2023. Below are key events from the second week of October impacting our business: INFLATION SLOWS IN SEPTEMBER. Inflation continued to ease in September and remained at a 3-year low as shelter costs continued to moderate. Shelter costs, the main driver of inflation since early 2023, saw their annual growth rate fall below 5% for the first time since February 2022. With the Fed beginning its easing cycle with a half-point cut last month, lower interest rates could help ease some pressure on the housing market. Though shelter remains the primary driver of inflation, the Fed has limited ability to address rising housing costs, as these increases are driven by a lack of affordable supply and increasing development costs. Additional housing supply is the primary solution to tame housing inflation. The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose by 0.2% in September on a seasonally adjusted basis, the same increase as in July and August. Excluding the volatile food and energy components, the “core” CPI increased by 0.3% in September, the same increase as in August. During the past twelve months, on a non-seasonally adjusted basis, the CPI rose by 2.4% in September, following a 2.5% increase in August. This was the slowest annual gain since February 2021. The “core” CPI increased by 3.3% over the past twelve months, following a 3.2% increase in August. Read the full story here.HOUSING CONFIDENCE INCHES HIGHER AMID RECORD-HIGH OPTIMISM TOWARD MORTGAGE RATES. The Fannie Mae Home Purchase Sentiment Index (HPSI) increased 1.8 points in September to 73.9, its highest level in more than two years, as consumers reported survey-high optimism that mortgage rates will decline over the next 12 months. The HPSI is up 9.4 points compared to the same time last year. “Although most consumers continue to think it’s a ‘bad time’ to buy a home, the recent shift in attitude toward mortgage rates is pushing overall housing sentiment higher, and a growing share are now pointing to high home prices rather than high mortgage rates as the primary sticking point for affordability,” said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. “Increased positivity that mortgage rates will continue to fall has driven the HPSI to a 30-month high, but we’ve yet to see consumers’ newfound rate optimism translate into a meaningful increase in home sales activity. Palim continued: “Notably, housing sentiment among renters, a common source of first-time homebuyers, has improved at approximately the same pace as homeowners. Over the last three months, the share of renters believing it’s a good time to buy a home has risen from 13% to 20%, while the share expecting mortgage rates to fall has risen from 16% to 30%. While these numbers are still relatively low, we think the improvement may signal that some potential homebuyers who have been waiting for mortgage rates to come down may be closer to coming off the sidelines, despite their ongoing concerns about home prices.” Read the full story here.HOW STRONG JOBS REPORT AFFECTED MORTGAGE RATES. The stronger-than-expected jobs report played havoc with mortgage rates this week, driving them to their highest level since the start of September, Freddie Mac said. The 20 basis point weekly gain was the largest since April, Sam Khater, Freddie Mac chief economist, said in a press release. The 30-year fixed rate mortgage averaged 6.32% for Oct. 10, up from 6.12% one week prior, Freddie Mac’s Primary Mortgage Market Survey reported. But it was still 125 basis points lower than the 7.57% it was at for the same week last year. Despite the uncertain environment, the Mortgage Bankers Association expects rates to fluctuate between 6% and 6.5% for the next several months, Bob Broeksmit, president and CEO said in a Thursday morning comment on the Weekly Application Survey. Read the full story here.
Take advantage of superior service and the convenience of one-stop shopping for the best loan and insurance coverage to fit your needs. Home warranty coverage is available through America’s #1 home warranty company, American Home Shield.
