Homeseed’s 2024 Mortgage & Real Estate Spring Update

Welcome to Homeseed’s 2024 Spring Market Update! We are in the thick of the spring market and  there have been many promising shifts in the real estate and mortgage markets recently. Whether you’re a seasoned homeowner or a hopeful buyer, the current market presents ample opportunities worth exploring. Let’s delve into the latest trends shaping the spring market and what they mean for you.

Mortgage Rate Outlook

The trajectory of mortgage rates has been a focal point for many, and recent developments shed light on what lies ahead. Since the outset of the year, rates have shown an upward trend, influenced by factors such as inflation dynamics and the strength of the labor market. While initial projections hinted at multiple rate cuts by the Fed in 2024, the latest forecasts suggest a more conservative approach, with one potential cut on the horizon. Fed Chair Jerome Powell’s reaffirmation of a probable cut underscores the Fed’s commitment to stabilizing inflation. However, the timing of this adjustment hinges on forthcoming economic indicators.

Inventory Is Increasing

Recent data on inventory signals a welcomed uptick in available homes especially when compared this time a year ago. This surge in inventory translates into a plethora of choices for both homeowners seeking upgrades and prospective buyers eyeing entry-level properties. For first-time buyers particularly, increased options alleviate some of the affordability concerns exacerbated by fluctuating mortgage rates. Simultaneously, current homeowners looking to sell find themselves in a favorable position, with heightened demand and an array of properties to explore.

Home Values Are Expected to Continue Appreciating

The continued increase in the value of homes underscores the allure of owning a home as an investment. Unlike renting, homeownership offers the dual benefits of shelter and equity accumulation. As the housing market continues its upward trajectory, homeowners stand to bolster their financial portfolios through accrued equity. Projections from the Home Price Expectations Survey paint a promising picture of sustained growth in home values over the coming years. This steady appreciation not only solidifies homeowners’ positions but also presents a compelling case for prospective buyers weighing their options. By capitalizing on the potential for long-term wealth accumulation, homeowners can leverage their equity to unlock new avenues of financial stability.

Opportunities in the Spring Market

The spring market offers a wealth of opportunities for both homeowners and homebuyers alike. With mortgage rates poised for potential adjustments later this year, it is estimated that 5 million buyers will enter the market for every 1% drop in mortgage rates. Coupled with the expanding inventory landscape, now is the time to stay informed and consider strategic financial decisions. Whether you’re looking to upgrade your current home or embark on the journey of homeownership, reach out today and lets discuss the opportunities for you this spring.

Mortgage Market Update (5/6/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • After surging higher in early April, mortgage rates have moved lower in the last week.
  • Mortgage rates trended lower week-over-week after the Fed’s announcement of tapering their balance sheet reduction and a weaker BLS Jobs Report.
  • The financial markets now expect just one rate cut this year due to the persistence of elevated inflation.

The Fed Meeting

  • The Fed wrapped up its third of eight annual meetings yesterday that followed with its usual press conference.
  • The financial markets tune in to the press conference where Fed Chair, Jerome Powell, acknowledged that elevated inflation meant a delay for the Fed’s next move with rates.
  • The good news was Powell reiterated that the next move is more likely to be a cut rather than a hike as the Fed believes they are still on track to return inflation back to their 2% target.

BLS Jobs Report

  • April’s job growth missed estimates, as there were 175K new jobs created versus the 243K that were expected.
  • Revisions to the data for February and March also shaved 22K jobs from those months combined while the unemployment rate rose to 3.9%. 
  • Overall, the data suggests softening in the labor sector, which could pressure the Fed to cut rates if this trend continues. 
  1. RATES MOVE LOWER AFTER FED MEETING – Positive momentum following the Fed meeting continue for a second day after Fed acknowledges next move will likely be a rate cut.
    https://www.mortgagenewsdaily.com/…
  2. ACTIVE INVENTORY IS UP – Report shows that active inventory and new listings are up on both a year-over-year and week-over-week basis.
    https://www.calculatedriskblog.com/…
  3. FED MEETING HIGHLIGHTS – The Fed keeps rates unchanged as it notes lack of further progress on inflation, but did acknowledge its next move would likely be a cut later in the year.
    https://www.cnbc.com/…
  4. FHFA’S EQUITABLE HOUSING PLANS – FHFA announced their finalized plans to address barriers to sustainable housing opportunities for first-time and low-and-moderate income buyers.
    https://www.housingwire.com/…

Mortgage Market Update (4/22/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates are flat but volatile week-over-week after surging much higher the week prior.
  • The pressure for higher rates was caused by a strong jobs report, more troubling inflation data, and a higher consumer spending.
  • The odds for the first rate cut by the Fed’s July meeting has now fallen below 50%.


Consumer Price Index (CPI)

  • The monthly report showed inflation was much hotter than expected in March, continuing a trend we’ve seen in recent months.
  • Rising energy, automobile insurance, and shelter costs were the main contributors to the increase in inflation.
  • Annual inflation still remains below the peaks in 2022, but stubbornly high inflation readings will likely delay the Fed’s timing for rate cuts this year.


Home Builder Sentiment

  • The most recent Home Builder Sentiment report by NAHB showed that sentiment among builders remains in positive territory.
  • Internal components of the report show that buyer traffic and current sales expectations ticked higher.
  • Forward looking sales expectations have softened a bit due to higher rates as some buyers remain on the fence.
  1. MORTGAGE RATES FLAT – Rates are relatively unchanged week-over-week but the daily changes have been volatile.
    https://www.mortgagenewsdaily.com/…
  2. RATE CUTS DELAYED – The Fed Funds Rate could stay higher for longer if inflation persists.
    https://www.morningstar.com/…
  3. WHAT HOMEBUYERS WANT – A recent study shows that a vast majority of homebuyers are looking for a home with at least one home office.
    https://www.eyeonhousing.org/…
  4. HOME PRICES KEEP CLIMBING – Higher rates are keeping a lid on housing supply and putting pressure on home price appreciation.
    https://www.housingwire.com/…

Mortgage Market Update (4/8/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates increased noticeably on Monday and are higher on a week-over-week basis.
  • The increase in rates was due to higher than expected numbers for the S&P and ISM manufacturing indices, which also mentioned higher prices in their reports.
  • Prices are crucial due to the persistent inflationary pressures, and if they fail to revert to the downward trend it will make it hard for the Fed to want to cut rates.


Personal Consumption Expenditures (PCE)

  • This is the Fed’s preferred measure of inflation and its goal is for the Core reading, which strips out volatile food and energy prices, to be at 2%.
  • Last week’s release of data showed that the Core headline reading fell to 2.8%, but the progress lower has been slowing.
  • With future data projecting a slow progress towards 2% for Core PCE, it may take weaker labor market data before the Fed cuts rates.


BLS Jobs Report

  • March’s job growth roared in above forecasts, as the BLS reported that 303K new jobs were created.
  • 68% of the job gains came from three sectors: Leisure & Hospitality (49,000), Government (71,000), and Education & Health Services (88,000)
  • Revisions to the data for January and February added an additional 22K jobs to those months combined.
  • Unemployment rate declined to 3.8%.


Case-Shiller Home Price Index

  • The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices rose 6% year-over-year in its most recent report for January 2024.
  • The 6% annual rate is the fastest increase since 2022 and all 20 cities in its composite index saw annual increases for the second straight month.
  • Home values are expected to remain supported throughout 2024 as housing demand remains high.
  1. RATES MOVE HIGHER EARLY IN WEEK – The concern for higher prices and inflation after Monday’s manufacturing data pushed rates higher early in the week.
    https://www.mortgagenewsdaily.com/…
  2. ISM INDEX TURNS POSITIVE – A barometer of business conditions at U.S. manufacturers turned positive in March for the first time in 17 months.
    https://www.marketwatch.com/…
  3. BABY BOOMERS PLAN TO STAY IN HOMES – More than three-quarters of baby boomers plan to stay in their home as they grow older.
    https://www.businesswire.com/…
  4. HOUSING MARKET STAYS TIGHT – New home listings are down to start the Spring market, but competition remains fierce as demand is still high.
    https://www.mpamag.com/…

Mortgage Market Update (3/25/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Last week’s comments on rate projections by the Fed Chair, Jerome Powell, retained the Fed’s previous expectation of 3 rate cuts by the end of this year and gave the forward-looking markets something to be hopeful for, which led to a decrease in mortgage rates.
  • The labor market has been showing signs of weakness with the unemployment rate ticking up.

Inflation Higher Than Expected

  • Recent inflation data for both the Consumer Price Index (CPI) and Producer Price Index (PPI) came in higher than expected.
  • The month-over-month changes of 0.4% in CPI and 0.3% in PPI imply an annualized reading of 4.8% and 3.6%, respectively (the Fed’s target is 2% for core readings).
  • Inflation is the biggest concern for interest rates, so it was no surprise to see the Fed unwilling to cut rates just yet.

March Fed Meeting

  • The Fed left rates unchanged following their meeting that concluded today for the fifth straight time, but did acknowledge the recent higher inflation readings could be a result of seasonality that was impacting the data.
  • Federal Reserve Chair Jerome Powell stated that any adjustments to the policy rate would depend on incoming data and the evolving economic outlook.
  • The Fed’s dot plot showed they expect to cut rates three times in 2024 with the Fed Funds Rate decreasing to 4.6%.
  1. RATES IMPROVE AFTER FED MEETING – Mortgage rates have trended higher over the last week due to inflation reports, but comments by Jerome Powell did help ease concerns.
    https://www.mortgagenewsdaily.com/…
  2. FED HOLDS RATES STEADY – The Fed maintained its Fed Funds Rate following its two-day policy meeting as expected, and provided their thoughts on the recent inflation readings.
    https://www.cnbc.com/…
  3. BUYERS’ DESIRED HOME SIZES – A NAHB study shows that buyers want smaller sized homes than they did 20 years ago.
    https://www.eyeonhousing.org/…
  4. NAR SETTLEMENT MYTHS – Debunking some of the myths from the recent NAR settlement agreement.
    https://www.housingwire.com/…

Mortgage Market Update (3/11/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates are lower week-over-week after the recent PCE inflation data came in as expected.
  • Downward momentum on rates continued as yesterday’s ISM Services index showed a big decline in prices paid for the service sector where we are seeing most of the inflation.
  • Tomorrow’s BLS Jobs Report is potentially a market mover as recent comments by Fed members show they are paying close attention to the labor market.


Personal Consumption Expenditures

  • Fed’s favorite measure of inflation, Personal Consumption Expenditures, showed the headline or all-in inflation declined from 2.6% to 2.4% year-over-year.
  • Annualizing the last 6-months of core readings, which the Fed says they are looking at, puts Core PCE at 2.46% and close to their 2% target.
  • There are emerging signs that the consumer is coming under pressure when looking at income and spending data.


CoreLogic Home Price Insights

  • Home prices were up 5.8% year-over-year in January, which is an increase from 5.5% on the previous report.
  • Forecasts for February show home prices being flat and will rise by 2.6% over the next 12 months, but it is worth noting that CoreLogic has been very conservative in the past.
  • Despite fewer buyers in the current market, housing demand still exceeds available inventory which is why home prices remain supported.
  1. RATES LOWER AHEAD OF JOBS REPORT – Recent inflation data helps mortgage rates move lower ahead of the important BLS Jobs Report.
    https://www.mortgagenewsdaily.com/…
  2. FEBRUARY LAYOFF NUMBERS – Layoff announcements in February hit their highest level for the month since the global financial crisis in 2009.
    https://www.cnbc.com/…
  3. HOME-SELLING SENTIMENT MOVES HIGHER – February data shows more consumers believe it is a good time to sell a home ahead of the spring homebuying season when compared to January.
    https://www.fanniemae.com/…
  4. CREDIT SCORES WORSEN – For the first time in a decade, the average credit score for consumers fell according to FICO.
    https://www.investopedia.com/…

Mortgage Market Update (2/26/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • The main reason for higher mortgage rates this week was due to a weak 20-year bond auction that caused a sell off in the bond market.
  • Mortgage rates have seen a slight upward trend since the beginning of the year due to stronger inflation and labor market data.
  • The minutes from the most recent Fed meeting were released this week which confirmed that they are certain to cut rates this year, but this will likely not occur by the next meeting in March.

Existing Home Sales

  • Housing inventory remains low with about 3 months of supply of homes versus the normal market value of 4.6 months.
  • The median home price rose by 5% from the previous year, reaching $379,100.
  • Lawrence Yun, Chief Economist for NAR, notes that mid-priced homes are receiving multiple offers, with a significant share (32%) being cash deals, indicating a market driven by record-high housing wealth.

Producer Price Index

  • The Producer Price Index measures inflation from the perspective of producers.
  • Similar to the recent CPI report, inflation on the producer side was also higher than expected for the month of January.
  • Services were the main culprit in the high inflation reading that includes items such as health care and legal services.
  1. RATES MOVE SLIGHTLY HIGHER – A weak 20-year bond auction pushes rates slightly up to highs not seen since November.
    https://www.mortgagenewsdaily.com/…
  2. FHA HELPING BORROWERS KEEP HOMES – The new offering, called the Payment Supplement, will help borrowers bring their mortgage payments current and avoid foreclosure.
    https://www.hud.gov/…
  3. ACTIVE INVENTORY IS UP – Recent data shows that active inventory is up 15.7% and new listings are up 0.9% YoY.
    https://www.calculatedriskblog.com/…
  4. THE FED EXPRESSES CAUTION – Meeting minutes show that the Fed plans to cut rates this year, but express caution in lowering too quickly.
    https://www.cnbc.com/…

Mortgage Market Update (2/12/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates are higher this week as a result of strong labor market and manufacturing data.
  • The BLS Jobs Report showed nearly double the amount of jobs were added to the market than expected.
  • The ISM Non-Manufacturing PMI was also higher than expected and the upbeat economic data put additional upward pressure on rates.


BLS Jobs Report

  • The report for January showed that the 353,000 jobs created were nearly double the expected 180,000.
  • One thing to be mindful of is that January is a month of heavy adjustments due to new benchmarks, seasonal adjustments, and population controls.
  • Despite the job gains, the entire labor force is working on average 30 minutes less per week, which is equivalent to 2.4M jobs lost.
  • We will have to wait for February data to see if the labor market tightening once again.


Home Values Continue to Appreciate

  • The two most notable housing indices, Case-Shiller and FHFA, both recently released data showing that home prices set new highs.
  • Although data for December 2023 is not available yet, both indices show that home values were on pace to appreciate by 6% in 2023.
  • Lower numbers for existing inventory and active listings will continue to be supportive of home prices throughout 2024.
  1. RATES MOVE HIGHER – Upbeat economic reports provide the catalyst for higher week-over-week rates.
    https://www.mortgagenewsdaily.com/…
  2. MEDIA SAYING HOUSING CRASH – But housing credit data today looks nothing like what was seen in 2008.
    https://www.housingwire.com/…
  3. BOOST TO HOUSING SENTIMENT – The Fannie Mae Home Purchase Sentiment Index reached its highest level in nearly two years.
    https://www.fanniemae.com/…
  4. TWO SIDES TO JOB MARKET – Economists and reports say the labor market is strong, but job seekers don’t share the same confidence.
    https://www.cnbc.com/…

Mortgage Market Update (1/29/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates are relatively unchanged week-over-week with some volatility mixed in due to economic data and bond auction results.
  • Last week saw 2-year, 5-year, and 7-year Treasury auctions that were met with weak demand and put upward pressure on mortgage rates.
  • Recent GDP and labor market reports came in stronger than expected and the Fed would like to see more economic weakness to support disinflation.


Personal Consumption Expenditures (PCE)

  • Headline inflation rose 0.17% in January, close to the expected 0.2%, while the year-over-year reading remained at 2.6%.
  • Annualized core PCE over the last 6 and 8 months is 1.85% and 2.08%, respectively, which are close to the Fed’s target of 2%.
  • Although the Fed prefers the Core PCE measure for gauging inflation, it should be noted that the CPI tends to move the markets a bit more.


Pending Home Sales

  • Pending Home Sales (signed contracts on existing homes) surged 8.3% from November to December.
  • The large jump was attributed to the decline in mortgage rates we’ve seen since the highs back in October 2023.
  • The Chief Economist at the National Association of Realtors, Lawrence Yun, noted that sales are expected to rise significantly in each of the next two years.
  • An increase in the supply of homes on the market will be essential to satisfying all of the demand that current exists.
  1. RATES UNCHANGED WEEK-OVER-WEEK – Mortgage rates were volatile within a narrow range over the last week but are relatively unchanged.
    https://www.mortgagenewsdaily.com/…
  2. ECONOMY BOOSTED BY NEW HOME SALES – Continue demand for new housing helped employ workers, stimulate the purchase of goods, and avoid a recession in 2023.
    https://www.housingwire.com/…
  3. ACTIVE INVENTORY RISES – For the 11th straight week, active listings grew and looks to improve availability and affordability heading into the spring season.
    https://www.calculatedriskblog.com/…
  4. INFLATION CONTINUING TO COOL – The recent PCE report showed inflation continuing to cool and near the Fed’s 2% target.
    https://www.cnbc.com/…

Homeseed’s 2024 Mortgage & Real Estate Market Forecast

Welcome to Homeseed’s 2024 Mortgage & Real Estate Forecast! As we enter the exciting year of 2024, the anticipation and speculation surrounding the mortgage market and housing industry have prospective homebuyers carefully watching. In just the last three years, we’ve gone from seeing all-time low mortgage rates to some of the highest mortgage rates in the last two decades due to significant global events and economic shifts. To better understand what potentially lies ahead for this year, let’s dive into a forecast for the mortgage market and housing industry in 2024.

Inflation: The Driving Force for Mortgage Rates

Inflation has emerged as a pivotal factor shaping the mortgage market. After reaching a near 40-year high of 5.3% in March 2022, Core Personal Consumption Expenditures (PCE) has been on a gradual decline and now hovers at 3.2%, which is near the Federal Reserve’s (Fed) goal of 2%. Given the improvement on inflation, the Fed signaled they would begin rate cuts to their Fed Funds Rate before reaching the 2% target in hopes of easing into its inflation goal with minimal negative effects to the economy. With shelter accounting for 21% of Core PCE, CoreLogic’s most recent measure of shelter costs showed a 2.5% year-over-year increase in their real-time blended rents data. This suggests a continued improvement for inflation lies ahead as the shelter data used by the PCE report lags the real-time shelter data, and the markets are now predicting the first rate cut by the Fed as early as March 2024.

Supply and Demand: Limited Inventory Pushes Home Prices Higher

The housing market continues to grapple with enduring challenges in inventory shortage, fueling a steady increase in home prices. Despite efforts to address the housing deficit, housing starts persist below household formations, indicating a sustained scarcity of available homes for sale coming to the market that is unable to meet the escalating demand. This ongoing imbalance between the supply of homes and demand from buyers will likely intensify competition if mortgage rates continue to come down, leading to the possibility of bidding wars and soaring prices once again.

Mortgage Rate and Real Estate Forecasts

Given the trajectory of inflation, we forecast the 30-Year Fixed Rate Mortgage to fluctuate between a rate range of 5.75%-6.75% throughout 2024. If rates fall below 6%, this will potentially unlock move-up buyers who are current homeowners that want to upgrade their homes.

For home price appreciation, we forecast home values to increase between 4-5% in 2024. Values should stay strong as demand will remain high due to more households being formed than homes coming to market.

Seizing the Opportunity: A Time for Homeownership to Build Wealth

As we navigate the intricacies of 2024, this period stands as an opportunistic time for prospective homebuyers. With the likelihood of interest rates coming down and home prices on a continued ascent, buyers can consider the strategic move of securing a home now and later benefiting from potential refinancing opportunities in the near future. Here at Homeseed, we offer a Home Equity Forecast tool, shedding light on the significant wealth-building potential through home appreciation and amortization. It emphasizes that homeownership is not merely about costs and interest rates but extends to the concept of a home evolving into one of your most substantial investments for building wealth.

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