Rates this week…

Existing home sales slump

Pending Home Sales, which measures signed contracts on existing homes, were unchanged in April, which was a little beneath estimates looking for a 1% gain. The West, Midwest, and South all saw increases, but there was a big decrease in the Northeast, which pulled down the overall index.

Sales are now down 20% from last year, which is an improvement from -23% in the previous report.

"Not all buying interests are being completed due to limited inventory," said NAR Chief Economist Lawrence Yun. "Affordability challenges certainly remain and continue to hold back contract signings, but a sizeable increase in housing inventory will be critical to get more Americans moving."

Inflation still running hot

The Fed’s favorite measure of inflation, Personal Consumption Expenditures (PCE), showed that inflation rose 0.4% in April, which was hotter than estimates of 0.3%. Year over year, the index increased from 4.2% to 4.4%, which was also higher than anticipated.

The core rate, which the Fed focuses on and strips out food and energy prices, also rose 0.4% last month and increased from 4.6% to 4.7% year over year, which was hotter than forecasts.

While we did not see any progress today and inflation moved in the wrong direction, we do anticipate some nice progress over the next two months, as the comparisons from last year get much higher. This will help mortgage rates as well!

Zillow forecasts rising values

Zillow recently released their forecasts for home prices, predicting that home values will increase by roughly 4% in 2023. While 4% does not seem like that much, it is meaningful for wealth creation. If a buyer bought a $500,000 home and saw 4% appreciation, they would gain $20,000 in that year alone in appreciation.

Quick hits…

43% of home sellers are making concessions - According to Redfin, the rate of home sellers offering concessions to buyers has significantly increased, almost doubling from last year. During the three months ending April 30, 42.9% of home sellers made concessions, compared to 25.5% during the same period a year earlier.

The mortgage delinquency rate dropped to a historic low in March, according to CoreLogic. The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 1.1%, down from 1.5% in March 2022.

Debt Ceiling: Will a deal get done in time? Negotiators appear to be closer to a deal, with 7 days left before a possible federal default…

Happy Memorial Day Weekend!!

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