John's Finance Corner: Mortgage Rates and Economic Indicators
Hello, fellow homeowners and future buyers!
The past two weeks might have been quiet in terms of market-impacting data, but the bond market and mortgage rates have been anything but silent. As a mortgage loan originator, I'm here to keep you updated on the latest developments and what they mean for you.
**Pending Home Sales on the Rise**
Last week, we received updates on pending home sales, home price appreciation, and weekly unemployment claims. The National Association of Realtors reported that pending home sales, which represent signed contracts on existing homes, rose by 2.2% from October to November. This index has reached its highest level since February 2023, with sales 6.9% higher than the same period last year. Lawrence Yun, the Chief Economist at the National Association of Realtors, noted that buyers are adjusting their expectations regarding mortgage rates and are taking advantage of the increased inventory. Despite mortgage rates averaging above 6% for the past 24 months, buyers are no longer waiting for rates to drop significantly. This shift in the market dynamics has also given buyers more negotiating power as the market transitions away from being a seller's market.
**Home Price Appreciation Continues**
The Case-Shiller Home Price Index revealed that home prices nationwide rose by 0.3% from September to October, breaking the previous month's all-time high. Home values in October were also 3.6% higher than this time last year, following a 3.9% gain in September. While the pace of appreciation has slowed slightly, prices continue to rise across most regions in the country. This steady increase in home values is a positive sign for homeowners, indicating that real estate remains a robust investment.
**Unemployment Claims Decline**
In labor market news, initial jobless claims fell by 9,000 last week to 211,000, the lowest level since April. Continuing claims also dropped by 52,000. However, it's important to consider that the data was collected around the Christmas holiday, a time when some individuals may delay filing claims due to travel and other holiday activities. Higher unemployment claims can actually benefit mortgage rates as they typically drive bond prices lower.
**Impact on Mortgage Rates**
Despite the relatively calm period for economic data, the bond market, particularly the 10-year Treasury, has not performed well over the past two weeks, leading to an increase in mortgage rates. Concerns about potential inflation and uncertainties regarding the upcoming administration have caused unease among bond traders and investors. The coming weeks could be critical for mortgage rates as we await significant labor sector reports, payroll data, additional unemployment claims, and the latest unemployment rate.
For mortgage rates to stabilize, it's crucial for the 10-year Treasury to stay at or below 4.63. Unfavorable economic data could push bond markets higher, resulting in increased mortgage rates. Conversely, positive data could lead to a decline in bond markets, driving mortgage rates down.
**Stay Informed and Prepared**
As always, staying informed and prepared is key in navigating the ever-changing mortgage market. I'll continue to keep you updated on the latest developments and their implications for your homeownership journey. Remember, whether rates rise or fall, my goal is to help you find the best mortgage solution tailored to your needs.
Thank you for being part of our community, and here's to making the best decisions for your future!
John Lamberg
MORTGAGE LOAN ORIGINATOR
NMLS 189233
