Housing Market Gets Active, But Inventory Remains Limited
The Federal Reserve left interest rates alone, as somewhat expected, last week, and signaled that they will be watching for signs of lowering inflation begin lowering when better-than-expected employment figures for January suddenly drove 10-year Treasury prices down, while bond and mortgage rates rose this week, according to a recent California Association of Realtors (CAR) report. A resilient macro economy may mean the anticipated rate cuts will be slower to manifest than many had hoped, said the CAR report. Macroeconomics studies the behavior and performance of an economy as a whole, focusing on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product and inflation. Thus, weekly pending home sales numbers show that consumers were enjoying the recent reprieve on rates, and closed sales could begin to rise as the spring homebuying season begins over the next few months, the report added. As expected, the Federal Open Market Committee (FOMC) signaled that they could be done raising interest rates, but that future cuts would be dependent on improvements in inflation. As the FOMC meets only eight times a year, some analysts say that the next rate cuts could happen in May, with deeper reductions in the Fed Funds Rate not coming until the second half of 2024. The assessment was quickly followed by a surprisingly strong jobs report that sent the 10-year back above 4%, and the daily reading on mortgage rates back above 7% for the first time this year. According to the CAR report, the average 30-year fixed rate mortgage hit 6.61% at the end of 2023 and the beginning of 2024 and recent signs show that homebuyers responded in kind. According to CAR, mortgage purchase applications have been rising for four weeks in a row with the overall index reaching its highest level
