Market Update: Rates Climb Higher and Sellers Are in a Great Position; What Will Fed Chair Powell Have to Say This Week?

Blog posted On July 24, 2023

Mortgage rates trended slightly higher last week after initial jobless claims took a surprising dip Thursday morning. Lower-than-expected jobless claims = stronger labor market = not great for rates. Also in big news last week was the home inventory numbers and sales price data. Bigger news is coming up this week during the press conference with Federal Reserve Chairman, Jerome Powell, which immediately follows the interest rate announcement from the Fed.

Homeowners Can Reap BIG Profits Right Now if They Sell

• Home inventory slipped from 3.1 months’ supply to 3 months’ supply. The normal market level is 4.6 months. Fewer homes for sale = greater likelihood yours will sell for more
• The median home price increased 3.56% month-over-month
• 18 days is the average time homes are spending on the market – down from 29 days in March, meaning you can sell faster
• 1 in 3 homes are selling above the asking price

Fed’s Rate Hike Likely

The rate hike is almost 100% certain, meaning the bond market and rates have already priced accordingly. The bigger, more unpredictable factor that could influence rates is what Fed Chair Jerome Powell says after the announcement. Based on what he says and the language he uses, the markets will get a better idea of where the Fed’s head is in terms of outlook, economic progress, and rates.

Future Labor Market Holds Potential for Rates

Although initial jobless claims worked against rates last week, the future job market indicators hold potential for helping rates.

• 3-month pace of hiring within private sector ~196,000 – much lower than last year’s pace of 376,000

So the pace of hiring is slowing, employers are trying to increase employee retention, and economists are predicting an economic slowdown later in the year.

• Economic slowdowns are typically good news for those of us who like lower rates!

Coming Up This Week…

• Tues: Case-Shiller home price index (May) – home price appreciation predicted to slow
• Weds: New home sales (June) – monthly decrease expected

Fed interest rate decision – 0.25% increase predicted

• Thurs: Pending home sales (June) – monthly decrease expected
• Fri: Core PCE inflation (June) – slowdown expected to continue

What are your thoughts? Are you still waiting for rates to fall in order to buy? Let us know.

Sources: MBS Highway, Mortgage News Daily