Housing News:
Purchase mortgage applications dropped 2% last week and were down 32% from a year ago. Tight inventory continues to hamper sales. We do not see this trend changing in our area until more homeowners decide to sell their current homes. Since many homeowners were able to buy, or refinance into historically low interest rates they are tending to stay in their current home, or use them as rental property instead of selling. Homes that are prepared correctly, priced accurately, and marketed aggressively are still often seeing multiple offers.
Mortgage applications to refinance were up 1% on the week, despite being down 51% from the year before. Overall construction spending was up in March, although single-family homebuilding remained depressed amid higher mortgage rates. Another avenue to reverse the low housing inventory is for new construction to increase. However that has not been the case in this area for a variety of reasons.
Economic News:
The Fed raised its policy rate by 0.25% this week. This 10th consecutive hike puts the rate above 5% for the first time since 2007. Job openings fell more than expected in March to the lowest level in nearly two years, a sign the job market is loosening. Applications for unemployment benefits also rose by the most in six weeks, while continuing claims fell by the most since July.
The Federal Reserve remains the most influential entity in the mortgage market, with the power to determine mortgage rates according to their objectives. They recently voted to instruct the Open Market Desk at the Federal Reserve Bank of New York to carry out transactions in the System Open Market Account. The market experienced some instability due to the FDIC's bailout of another regional bank.
Weekly jobless claims were slightly higher than expected at 242K versus 240K, but unemployment fell to 3.4% from 3.6%. Payrolls exceeded predictions at 253K versus 180K.
Mortgage interest rates remained basically unchanged for the week. On Friday, May 05, 2023, the national average 30-year fixed mortgage APR is 6.80%. The average 15-year fixed mortgage APR is 6.18%, according to Bankrate's latest survey of the nation's largest mortgage lenders.
