Housing Market Update | Week of May 6th

Mortgage Rate Forecast - Week of May 13th After a pretty quiet week last week, we are back in the thick of the market data cycle with two inflation reports — the Producer Price Index (PPI) and the Consumer Price Index (CPI). Markets aren’t expecting much progress toward a lower inflation rate; however, recent labor data indicates that we could see continued job market weakness as the year continues. Mortgage Rates Last Week Rates Were Steady As was expected, last week was quiet regarding market data that could impact mortgage rates. We did see continued softening within the labor market as initial jobless claims hit their highest level since last August. The Federal Reserve has emphasized the role that a weak labor market will play in their decision to cut the federal funds rate this year, and if this kind of data continues to trickle in, the odds of rate cuts this year could increase. This Week's Mortgage Rate Forecast Rates Could Move This week, we have two big pieces of inflation data with the PPI and CPI inflation reports coming on Tuesday and Wednesday, respectively. Market expectations are that year-over-year inflation will remain at 3.5% in the CPI report, which is the main marker measured by the Federal Reserve. The onus of lower rates remains with labor data, and with some softening in the labor market seen earlier this month plus tighter spreads between the 10-year yield and mortgage rates, momentum could be on our side to see lower rates soon. When we work together to create more confident homebuyers, we go a long way toward creating the best possible homebuying experience for our clients. Later this month, we’re hosting an exclusive training session sharing methods that will help us instill confidence in our buyers and quell any fears that they may have. Save your spot for the training on Tuesday, May 28th at 3pm ET.

Last week was a wild one for mortgage rates. Although the Federal Reserve announced that they would not be cutting the Federal Funds rate in their May meeting, they did announce that they are tapering their balance sheet reduction. This, combined with weak labor data sprinkled at the end of the week, saw mortgage rates drop at the end of the week. Last Week's Rate Recap: Rates Dropped Slightly Last week, the Federal Reserve held its May meeting. While they decided against cutting rates, Jerome Powell, Fed Chairman, held a dovish stance on the possibility of rate cuts in the future. Last week’s labor reports also showed a softening in the jobs market which caused rates to drop quickly at the end of the week. While it’s still unlikely that we see a rate cut in the Fed’s next meeting, a weakened labor market will be the key to seeing rates drop as the year goes on. This Week's Rate Forecast: Rates Should Stay Steady After the flurry of data and insight from last week’s jobs reports and the Federal Reserve meeting, we have a quieter week ahead without much data for the market to digest. Following a steep drop to the 10-year yield at the end of the week, market analysts will have a careful approach to instill some stability throughout the week. Overall, we should expect to see some steadiness throughout the week. If you want a more comprehensive overview of the market’s reaction to the Federal Reserve meeting and labor data last week, check out a replay of today’s Special-Edition Monday Market Update. Our two hosts offered plenty of insight behind these rate movements and some tactical advice to help you use these pieces of market data to better serve our homebuyers.

Last week’s inflation data came in a little hotter than expected and, combined with slowed GDP growth and low jobless claims, mortgage rates rose slightly last week. With inflation moving in the wrong direction the last three months, there will be a much bigger emphasis on the job market breaking for the Fed to cut rates this year. We have three big pieces of employment data coming this week as well as the Federal Reserve’s 2-day May meeting ending on Wednesday, so expect some movements this week. Next week, May 6th at 11:30am, we are recapping the Federal Reserve meeting during a special edition of our Monday Market Update. Our resident market experts will recap the meeting and review what was said by Fed Chairman, Jerome Powell, to provide a look ahead at what we can expect with the summer housing market. This event will be free to stream live on YouTube, follow this link and subscribe for a notification when we go live! Last Week's Rate Recap - Rates Rose Slightly The Federal Reserve has been trying to slow the rate of inflation since 2022, but last week’s PCE data showed that we are continuing to trend away from their target of 2.7%. Although the PCE report came in as expected, it still sent stocks and mortgage bonds higher and put increased pressure on labor data to get our desired rate cuts this year. This Week's Rate Forecast - Rates Could Be Volatile This week we have two main areas of focus for the housing market and mortgage rates. Tomorrow and Wednesday, the Federal Reserve will hold its May Fed Meeting. Although a rate cut is unfortunately all but off the table, Jerome Powell’s press conference will give us insight into their path forward. We also have multiple labor reports, and, as we mentioned earlier, an increase in unemployment will be key for any future rate cuts. We’ll have the ADP employment report on Wednesday, initial jobless claims on Thursday, and the BLS jobs report on Friday, so expect some volatility in the second half of the week. Once again, our market experts will be offering a full breakdown of the Fed Meeting and how the decisions made and rhetoric released will impact the housing market next Monday at 11:30am ET on YouTube live. This presentation is free to stream and will offer loads of educational insight that will help empower you this purchase season. You can watch this and all our weekly Market Update streams right here on the UMortgage YouTube channel!