Rates in Holding Pattern Following Fed Decision

As we begin a holiday-shortened week due to the Juneteenth Holiday, we saw rates end last week taking pause as markets digest the events of last week including the Fed pausing its rate hikes and giving some clues as to what it will do in the future. There was also interesting inflation data and lots of housing data to watch for this week.

In addition to the Fed pausing its rate hikes in last week’s meeting, there was some surprising news out of the meeting that it's possible there will be two more rate hikes this year. The uncertainty presented by these comments will likely have more effect on mortgage rates than the decision to pause rate hikes because mortgage rates are based on more forward-looking, longer-term factors.?

So, of course, the data going forward will be a heavy influence on the Fed’s next moves. As for the short term, there were a couple of important reports that came out this week about the health of the housing market.?

The housing market index has been on the rebound, jumping a surprising 5 points in May to 50 and another 5 points for June showing much more optimism among home builders than predicted. The housing market index is a monthly measure of home builder assessments of present and future sales as well as buyer traffic.

The report on new housing starts and building permits came out Tuesday showing housing starts in April bounced higher to a 1.40 million annual rate, up from March's 1.37 million. May was expected to hold steady but surprised analysts with a sizable jump up 22 percent for new housing starts. Clearly, builders are jumping into the market to fill the gap in housing supply.?

Also increasing is the number of applications for new mortgages, up 7 percent for the week. Even the number of people applying for refinances has increased by 6 percent in just one week.?

I’ll be keeping an eye on all of it for you, as well as Fed Chair Jerome Powell’s couple of speeches and appearances expected this week, and report back this time next week. In the meantime, when you’re planning your next purchase, let’s talk and I can help you come up with the scenario that helps you reach your financial goals.