POST TAGSMarket Updates
Blog posted On January 16, 2023
Mortgage rates slipped lower last week after the release of the consumer price index for December. The index, which measures the changes in the average price of a fixed basket of goods and services, showed that inflation is continuing to cool. This was welcome news for the bond market and interest rates. In fact, it was VERY welcome news.
The consumer price index has been one of the most closely watched economic reports over the past several months. You may have noticed the uncomfortably steep pace at which mortgage rates climbed last year. A lot of this had to do with hotter-than-expected inflation data, stronger-than-expected jobs data, and of course the multiple 0.75% rate hikes from the Federal Reserve. All of these factors are connected, yet none of them are ideal for bonds or rates.
Rates finally started to catch a break when the Bureau of Labor Statistics released its consumer price index for October on November 10th. This release had inflation levels that were much cooler than expected, which in turn gave the markets hope that inflation had reached its peak and it would continue trending lower. The consumer price indices for both November and December supported this hope. Long story short, last week was a good week for rates.
This week, the existing home sales report is scheduled for release. Existing home sales or resales track the sales of previously constructed homes and make up approximately 90% of residential real estate transactions. In November, existing home sales dropped by 7.7%, which could be partially an effect of typical seasonal cooling. December’s existing sales will likely continue this trend, just at a slower decline.
Let us know if you have any questions!
Sources: Bloomberg, Mortgage News Daily