Bumpy recovery while inflation rises, still far from last year
Good news for homebuyers, as mortgage rates continue to drop in the latest Freddie Mac survey, falling to 6.32%, the lowest in six weeks. However, other measures of rates moved in the opposite direction, amid continued market volatility. Despite this, the housing market has seen improvements in several areas, including a 2% rise in mortgage purchase applications, a surge in Redfin’s Demand Index to its highest level since last May, and a better than expected pending home sales figure for February, with a 0.8% increase over the month.
On the economic front, the latest personal income and outlays data from the Bureau of Economic Analysis (BEA) revealed positive progress in the Fed’s preferred gauge of inflation. While core inflation eased to 0.3% over the month, still above the 2% target, consumers are expecting inflation to continue to moderate to just 3.6% one year from now.
However, consumer sentiment has taken a hit this month, as people increasingly expect a recession ahead. The housing market continues to fluctuate, with buyers being sensitive to weekly changes in mortgage rates. While pending home sales only increased by 0.8% in February, they are up to the highest level since August, suggesting that the sector’s contraction is coming to an end. House prices have fallen for a seventh straight month, with declines seen in San Francisco, Seattle, San Diego, and Portland.