Mortgage Rates Drop For Second Week In A Row

Last Week in Real Estate, Freddie Mac reported the lowest mortgage rates in five weeks, with the 30-year fixed-rate mortgage dropping by 14 basis points to an average of 6.74%. This resulted in consecutive weekly growth in mortgage applications. Despite a significant decline in the inflation growth rate since the peak in mid-2022, last week’s Core Price Index (CPI) and Producer Price Index (PPI) from the U.S. Bureau of Labor Statistics indicate a rise in inflation for February, while solid spending and a strong labor market suggest a healthy economy. With unemployment consistently below 4% for over two years – the longest stretch since the 1960s – many anticipate that the Federal Reserve, in its upcoming two-day policy meeting, will maintain its current stance and delay any decision to lower the benchmark federal funds interest rate until at least summer. Below are a few newsworthy events from the second week of March that influence our business:  
MORTGAGE RATES TUMBLE FOR THE SECOND WEEK IN A ROW. Mortgage rates dropped for the second week in a row, falling nearly a quarter of a percentage point over the past two weeks in the face of stronger-than-expected employment and inflation data. The 30-year fixed-rate mortgage averaged 6.74% in the week ending March 14, down from 6.88% the previous week, according to data from Freddie Mac released Thursday. After rates dropped slightly last week, more would-be buyers came to the market. Applications for mortgages were up 7% in the week ending March 8 from the week before, according to the Mortgage Bankers Association. The Federal Reserve’s historic campaign of rate hikes to rein in inflation has brought the measure down considerably over the past two years. But Chair Jerome Powell has said the central bank needs to see more consistent evidence that inflation is improving before initiating rate cuts. Fed rate cuts are not expected before the summer and may not come until the fall. For a housing market that came into the year thinking cuts could come as early as March, that delay is keeping mortgage rates elevated. Read the full story here.
STRONG REBOUND IN SINGLE-PERMITS AT THE START OF 2024. Over the first month of 2024, the total number of single-family permits issued year-to-date nationwide reached 75,906. On a year-over-year basis, this is an increase of 43.1% over the January 2023 level of 53,062. Year-to-date ending in January, single-family permits were up in all four regions. The range of permit increase spanned 67.0% in the West to 19.4% in the Northeast. The South was up by 39.4% and the Midwest was up by 36.5% in single-family permits during this time. Year-to-date, ending in January the total number of multifamily permits issued nationwide reached 38,870. This is 18.9% below the January 2023 level of 47,936. For multifamily permits, the regions were split, with half posting increases and the other posting decreases. The Northeast was up by 64.5% and the Midwest was up by 13.6%. The South posted a decline of 32.5% and the West declined by 27.9% in multifamily permits during this time. Read the full story here.
US WHOLESALE PRICES PICKED UP IN FEBRUARY IN SIGN THAT INFLATION PRESSURES REMAIN ELEVATED. Wholesale prices in the United States accelerated again in February, the latest sign that inflation pressures in the economy remain elevated. The Labor Department said Thursday that its producer price index rose 0.6% from January to February, up from a 0.3% rise the previous month. Measured year over year, producer prices rose by 1.6% in February, the most since last September. The figures could present a challenge for the Fed, which meets next week and is counting on cooling inflation as it considers when to cut its benchmark interest rate. Thursday’s data follows a report earlier this week on the government’s most closely watched inflation measure, the consumer price index. The CPI rose by a sharp 0.4% from January to February, a faster pace than is consistent with the Fed’s 2% inflation target. Compared with a year earlier, prices rose 3.2%, up from a 3.1% increase rise the previous month. The CPI report, which marked the second straight pickup in consumer prices, illustrated why Fed officials have signaled a cautious approach toward implementing rate cuts. After meeting in January, the officials said in a statement that they needed “greater confidence” that inflation was steadily falling to their 2% target level. Last week, Fed Chair Jerome Powell signaled to Congress that the central bank was “not far” from starting rate cuts. Read the full story here.

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