The Current State of Refinancing Inflation, Home Price Growth Headed Downward: Fed Report but based on the Bureau of Labor Statistics, Inflation Rose 0.1% In August Even with Sharp Drop In Gas Prices

Inflation, Home Price Growth Headed Downward: Fed Report

According to the most recent Survey of Consumer Expectations (SCE) from the Federal Reserve inflation is predicted to continue “to decline across all horizons” over the coming year while home price growth is also predicted to decline “sharply” to the lowest level since July 2020.

The August SCE survey reports that the median one-year inflation outlook decreased from 6.2% in July to 5.7%. The median estimate for home price growth decreased by 1.4 percentage points from July to August, falling to 2.1%, the lowest SCE reading since July 2020.

Even so, he ome prices during thyear’s second quarter hit a high peak, despite the gloomy predictions for the housing market as we approach the third quarter of 2022. According to the Federal Reserve Bank of St. Louis, average home prices increased dramatically in the second quarter of this year, rising to $525,000 from $440,600 for the same time in 2021. According to the research, the median sales price in the second quarter of this year was $440,300, up from the second quarter of last year’s median sales price of $382,600.

Inflation Rose 0.1% In August Even with Sharp Drop In Gas Prices

Based on the Bureau of Labor Statistics, inflation increased more than anticipated in August as rising housing and food prices partially offset a decline in gas prices.

The consumer price index, which measures the cost of a wide range of goods and services, rose 0.1% in the month and 8.3% in the previous 12 months. When volatile prices for food and energy were excluded, the CPI increased 0.6% from July and 6.3% in the same month in 2021.

For the month,energy costs decreased by 5%, with the gasoline index falling by 10.6%. However, other increases more than countered those reductions.

In August, the food index rose by 0.8%, while the cost of housing, which accounts for nearly one-third of the CPI’s weighting, increased by 0.7% and is now up 6.2% from a year earlier.

Medical care services also experienced significant growth, increasing by 5.6% from August 2021 and 0.8% monthly. Prices for new cars increased by 0.8%, while those for used vehicles decreased by 0.1%.

Following the news, the stock market had its worst single trading day since June 2020. The market dropped almost 1,300 points in the session.

The August data also contained some positive news for employees, with real average hourly wages increasing by a seasonally adjusted 0.2% for the month. They were still 2.8% lower than they were a year earlier.

The Federal Reserve has increased interest rates four times this year for a total increase of 2.25 percentage points to fight the overall rise in the cost of living. The central bank wants to control inflation without wrecking the economy; therefore, Tuesday’s report is anticipated to have more impact through the remainder of the year and into 2023 than on the September meeting.

The Current State of Refinancing

“Higher mortgage rates have pushed refinance activity down more than 80 percent from last year and have contributed to more home buyers staying on the sidelines. Government loans, which tend to be favored by first-time buyers, bucked this trend and increased over the week, driven mainly by VA and USDA lending activity.” –Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting.

Next week’s potential market moving reports are:

  • Monday, September 19 – NAHB Home Builders’ Index
  • Tuesday, September 20 – Building Permits, Housing Starts
  • Wednesday, September 21 – Existing Home Sales, Federal Reserve Statement
  • Thursday, September 22 – Initial Jobless Claims, Construction Spending,
  • Friday, September 23 – No Report

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

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Redfin Reports Homebuying Competition Drops Near Pandemic-Era Low Zillow says Buyers Gaining Time, Options as Housing Market Rebalances

Mortgage Rate

Homebuying Competition Drops Near Pandemic-Era Low, Redfin Reports

According to recent data from Redfin, competition for home purchases continues to decline as affordability challenges keep many buyers out of the market.

The number of prospective purchasers to make counteroffers is declining, confirming the softening in the market. Counteroffers accounted for only 44.3% of offers made by Redfin agents in July on a seasonally adjusted basis. This represents a decrease from 63.8% from the same time a year ago. This is also lower than last month’s 50.9% for June 2022. This is the sixth consecutive month where multiple-offer scenarios have fallen.

The percentage of offers countered in July was the second-lowest rate the national real estate brokerage had ever seen during the COVID-19 pandemic. The only month with a smaller share was April 2020, when the virus’s appearance brought the housing market to an abrupt halt.

“There’s not the same sense of urgency,” said Alexis Malin, a Redfin real estate agent in Jacksonville. “House hunters are scheduling tours four days in advance instead of one, and they’re becoming much more selective. If a home doesn’t check all of their boxes, they’re waiting until they find one that does. Six months ago, buyers were taking any house they could get.”

Scales have started to tip in favor of buyers as properties begin to stay on the market for extended periods. Even though there is still a long way to go until a buyer’s market is officially proclaimed, some sellers have begun to lower their prices to spur demand. Price reductions occur on 8% of market listings weekly, which is a record-high number.

2022/07/Bidding-Wars-June-Chart

Zillow: Buyers Gaining Time, Options as Housing Market Rebalances

As per Zillow’s most recent market analysis, property values decreased marginally from June to July, following two years of unmatched increase.

The market is thus swiftly rebalancing, according to Skylar Olsen, chief economist at Zillow. Competition for homes is dwindling due to purchasers’ purchasing power being lowered by nearly two years of double-digit price rises and increased mortgage rates.

Zillow further reports that the average U.S. home value dropped by 0.1% ($366) month over month in July and is now $357,107. Since recently peaking at 1.9% in April, monthly growth in this statistic has slowed, declining to 1.2% in May and 0.8% in June. Although a slowdown in home price increase at this time of year is expected, this is the first monthly drop since 2012. The mean home value nationwide has increased by 16% over the past year and 44.5% since July 2019.

In 30 of the 50 largest metro areas, home values as assessed by raw ZHVI decreased from June to July.

Next week’s potential market moving reports are:

  • Monday, August 29th – No Report
  • Tuesday, August 30th – U.S. Home Price Index, Job Openings, Quits
  • Wednesday, August 31st – Cleveland and Atlanta Fed Presidents Speak
  • Thursday, September 1st – Initial Jobless Claims, Construction Spending
  • Friday, September 2nd – Unemployment Rate, Average Hourly Earnings

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

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National Association of Realtors recognized double-digit price increase on home prices this August as mortgage rates increase and home sales slowing down

Mortgage Rates Above 5% Again, Home Prices Keep Rising

The next release of the Case Shiller and FHFA home price indices won’t be released for a few weeks, but this week’s Mortgage Monitor from Black Knight provides an earlier glimpse at June’s data.

Black Knight’s statistics for May showed year-over-year appreciation dipped below 20%, but barely. Much like FHFA and Case Shiller. The official figure was 19.3% (Case Shiller was still above 20%, and FHFA had dropped to 18.3%).

Today’s data reveals a more apparent slowdown in June, with the annual pace dropping to 17.3%. Even though that is by far the most significant reduction since records have been kept, there is a concern. Price growth preceding these declines broke records. Given that we have had extraordinary price growth in the last few years, this could be the precursor to a significant decline. However, the ability to avoid a deep recession would likely reduce the amount in which property values decline.

Tide Turning In Favor Of Homebuyers As Seller Competition Increases

According to the most recent HouseCanary study, economic uncertainty has led to a further slowdown in housing market activity. The most recent Market Pulse report from HouseCanary, comparing data from July 2021 to July 2022, was issued today.

“In July, economic uncertainty and another steep interest rate hike from the Fed appeared to have impacted both seller and buyer behavior,” said Jeremy Sicklick, co-founder and CEO of HouseCanary. “On one hand, elevated rates have contributed to a decrease in new net listing volume, with would-be sellers sitting on high amounts of equity and locked-in low mortgage rates. On the other hand, demand has also decreased, partly due to the sharp increase in interest rates, which had deterred potential buyers.”

HouseCanary further reports that 3.25 million net new listings have been added to the market since July 2021, which is an 8.6% reduction over the previous year. Moreover, the monthly new listing volume was down 9% from July 2021. There were 323,484 net new listings added to the market in July 2022, a 17.8% decline from the same month last year.

Consumer Prices Rose 8.5% in July As Inflation Pressures Eases

Consumer prices increased by 8.5% in July over the same month last year, primarily because of lower fuel costs. Prices were unchanged monthly despite a 4.6% global drop in energy costs and a 7.7% drop in gasoline prices, and this has lessened the impact of monthly increases in food prices of 1.1% and housing expenses of 0.5%.

Inflation pressures persisted despite the numbers coming in lower than anticipated. With the increase in the food index, the annual growth rate reached 10.9%, the fastest pace since May 1979. Despite the energy index’s monthly decline, electricity costs increased by 1.6% and were 15.2% higher than they were a year earlier.

After gas prices climbed beyond $5 per gallon, the July price decline has given consumers some cause for optimism. Despite an 11% drop in July, gasoline prices were still up 44% from a year earlier, and fuel oil prices were up 75.6%.

The Federal Reserve is executing a strategy of rate hikes and related monetary policy tightening to curb inflation rates that are significantly higher than their long-term aim of 2%. In 2022, the central bank has increased benchmark borrowing rates by 2.25 percentage points, and authorities have made clear signs that further rises are imminent.

A New York Fed study earlier this week revealed that consumers’ future inflation expectations have decreased, which was some positive news. But for the time being, an issue is still the rising living expense.

Next week’s potential market moving reports are:

  • Monday, August 15th – NAHB Home Builders’ Index
  • Tuesday, August 16th – Building Permits, Housing Starts
  • Wednesday, August 17th – No Report
  • Thursday, August 18th – Initial Jobless Claims, Continuing Jobless Claims, Existing Home Sales
  • Friday, August 19th – No Report

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

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