{"id":4071,"date":"2023-04-10T02:22:43","date_gmt":"2023-04-10T02:22:43","guid":{"rendered":"https:\/\/frankbuysphilly.com\/housing-market-tracker-mortgage-rates-drop-almost-1\/"},"modified":"2023-04-10T02:22:43","modified_gmt":"2023-04-10T02:22:43","slug":"housing-market-tracker-mortgage-rates-drop-almost-1","status":"publish","type":"post","link":"https:\/\/frankbuysphilly.com\/housing-market-tracker-mortgage-rates-drop-almost-1\/","title":{"rendered":"Housing Market Tracker: Mortgage rates drop almost 1%"},"content":{"rendered":"
\n<\/p>\n
The housing market <\/a>welcomed the news of lower mortgage rates<\/a>\u00a0last week after four reports showed that the labor market isn\u2019t as tight as it seems and that the fear of 1970s-entrenched inflation was a lousy narrative. The 10-year yield finally broke below a critical technical level it had difficulty breaking for many months and we had a very small increase in inventory.<\/p>\n Here\u2019s a quick rundown of the last week:<\/strong><\/p>\n An epic battle for the 10-year yield finally ended last week when it broke below the significant level of 3.42%-3.37%<\/strong> \u2014 the Gandalf line in the sand<\/a>. After the jobs report on Friday<\/a>, the bond yield retraced up to that critical line, but I tend not to put any weight on a holiday trading day. As you can see in the chart below, that red line was tough to break below, but it finally happened. This week’s trading in the bond market will be exciting with the upcoming inflation data.<\/p>\n <\/p>\n In my 2023 forecast,<\/a> I said that if the economy stays firm, the 10-year yield range should be between 3.21% and 4.25%<\/strong>, equating to 5.75% <\/strong>to 7.25%<\/strong> mortgage rates. <\/strong>If the economy gets weaker and we see a noticeable rise in jobless claims, the 10-year yield should go as low as 2.73%, <\/strong>translating to 5.25%<\/strong> mortgage rates. <\/strong><\/p>\n This assumes the spreads between the 10-year yield and the 30-year stay wide, as the mortgage-backed securities market is still very stressed.\u00a0<\/p>\n The banking crisis<\/a> has put the entire year into a new variable spin as short-term rates now forecast rate cuts happening sooner than the Fed wants.\u00a0However, everything looks right on the long end of the bond market, as jobless claims have been rising lately but not at my crucial level of 323,000 <\/strong><\/a>on the four-week moving average yet. If short term and long term rates keep falling with weaker economic data, it will force the Fed to cut rates faster than it originally wanted to.<\/p>\n The four-week moving average is running at 237,500, shown below on the chart.<\/strong><\/p>\n <\/p>\n Last Friday, I wrote about the jobs report<\/a> and how it should be evident to anyone now, especially the Federal Reserve<\/strong>, that the fear of 1970s entrenched inflation was simply a joke. During the hottest labor market in history, wage growth was falling year-over-year, not spiraling out of control. <\/p>\n Mortgage rates started last week at 6.44%<\/strong> and fell to a low of 6.16%<\/strong>, then ended the week at 6.34%<\/strong>. So for all the drama we have had this year, the 10-year yield has held its range even with a national banking crisis. Now, we have enough data to see that the labor market isn\u2019t as tight as it seems. With the CPI inflation data and retail sales this week, we could see another volatile pricing week, depending on the data.<\/p>\n Looking at the Altos Research<\/strong><\/a> data from last week, the big question is: Have we seen the seasonal bottom in Inventory?\u00a0I’m crossing my fingers that we may have finally reached the bottom. Housing inventory had only a tiny gain last week, but I am hopeful that April is the month we see the seasonal inventory increase.\u00a0<\/p>\n As you can see in the chart below, we are far from what a normal inventory channel looks like, and it\u2019s been hard getting inventory back to pre-COVID-19 levels. <\/p>\n Mortgage rates in the previous economic expansion ranged between 3.25%-5%, and inventory had slowly been moving lower and lower. Last year we had the biggest mortgage rate spike<\/a> in history, and it did create more inventory for us, but it couldn’t get us back to 2019 levels.<\/p>\n <\/p>\n Last year, the weekly seasonal inventory<\/a> bottom was set on March 4;<\/strong> we still need to confirm the weekly bottom in 2023. This year looks similar to 2021 data, which bottomed on April 9<\/strong>, so April could be the turning point.<\/p>\n\n
The 10-year yield and mortgage rates<\/strong><\/h2>\n
Weekly housing inventory<\/strong><\/h2>\n
\n