Mortgage rates remained stable this week as the personal consumption expenditures (PCE) inflation report matched economists’ expectations.
As a result, HousingWire’s Mortgage Rates Center showed the average 30-year fixed rate for conventional loans at 7.17% on Tuesday, up from 7.16% one week earlier. At the same time one year ago, the 30-year fixed rate averaged 6.5%. Meanwhile, the 15-year fixed rate averaged 6.43% on Tuesday, down from 6.51% one week earlier.
“We had the PCE inflation report come out Friday and because some people were expecting a hotter number than estimates, it was perceived to be bullish for rate cuts,” HousingWire lead analyst Logan Mohtashami wrote on Saturday.
“The 10-year yield channel is between 4.25%-3.80%, which looks correct as long as the economic data stays firm and jobless claims don’t break higher. This means mortgage rates will likely remain in the upper range of my 2024 forecast of 6.75%-7.25%.
“Monday’s economic data was good; the manufacturing data came in at a huge beat and the GDP (gross domestic product) revisions were positive for this quarter’s upside,” Mohtashami added. “For the first time in a long time, both the U.S. manufacturing data are now in expansion territory. Bond yields rose and we have four labor reports to work on this week.”
As of March 29, there were 517,355 single-family homes on the market, up from 512,759 the week prior. During the same week last year, inventory fell from 413,883 to 410,734. The all-time inventory low was in 2022 at 240,194, while the inventory peak for 2023 was 569,898.
“We should have close to 700,000 homes on the market in August or September,” Mike Simonsen, founder and president of Altos Research, wrote on Monday. “It won’t be a lot actually, but it’ll be the most homes available since 2019. The longer we stay at higher mortgage rates, the more inventory can build back to the old normal levels.”
According to the April 2024 Mortgage Monitor report from Intercontinental Exchange (ICE), homeowners who took out mortgages with near-record-low rates in 2020 and 2021 face much higher monthly payments even if they move to an equivalently priced home. A “lateral move” of this type would cost 60% more per month, ICE reported.
“Lower rates would ease the calculation for many and make moves more reasonable,” Andy Walden, vice president of enterprise research at ICE Mortgage Technology, said in a statement. “But the net result continues to be too few homes for too many buyers. Until that fundamental mismatch is addressed, simple supply and demand will continue to press on both inventory and affordability.”