Home values continuing to grow

NATIONAL MARKET UPDATE

Zillow reports home values rose 1.4% from April to May, faster than the two spring markets before the pandemic. Low inventory is the reason, which can lead to “bidding wars as buyers compete for limited options.”

The Mortgage Bankers Association reports purchase loan applications were up 8% versus the week before, and “the average loan size...decreased for the third straight week, as we continue to see more first-time homebuyer activity.”

Homebuyers are on the move. In the first three months this year, almost 60% of all Realtor.com listing page views in the top 100 metros were for homes outside the shopper's metro, up from the prior quarter and year-over-year.

REVIEW OF LAST WEEK

NO HIKE, STOCKS SPIKE... After hiking rates for 10 straight FOMC meetings, the Fed last week held off. Stocks rallied on the hopes of a less-aggressive Fed which might actually succeed in avoiding a recession.

Fed Chair Powell emphasized this wasn't the end of rate hikes, as inflation is still above their 2% target. But the May Consumer Price Index (CPI) showed inflation on a downward trend, hitting 4%, a two-year low.

Also, a sharp decline in wholesale price inflation indicated lower CPIs ahead. A boost in Retail Sales showed consumers still contributing, though University of Michigan Consumer Sentiment reported people expect economic difficulties.

The week ended with the Dow UP 1.2%, to 34,299; the S&P 500 UP 2.6%, to 4,410, and the Nasdaq UP 3.2%, to 13,690.

Bonds rose a tick overall, with the 30-Year UMBS 5.5% inching UP 0.05, to $100.03. Freddie Mac's Primary Mortgage Market Survey found the national average 30-year fixed mortgage rate edged lower again. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.  

DID YOU KNOW… Analysts say Gen Xers (age 41 to 56) are the #1 demographic cohort when it comes to the ability to buy homes. They’re at their peak earning years and have benefited from stock market and home price growth.

THIS WEEK'S FORECAST

HOME BUILDING, EXISTING HOME SALES, JOBLESS CLAIMS... It's expected we'll see builders treading water in May, with Housing Starts holding at April's annual rate. Looking to the future, things should get more active, with May Building Permits up from April. May Existing Home Sales are also forecast to be in a holding pattern, thanks to tight inventory. But analysts predict weekly Initial Unemployment Claims will recede from their recent elevated levels.

U.S. stock and bond markets are closed today, June 19, in observance of Juneteenth National Independence Day.

Probability of change from current policy 

Thank you to Sean Donanue and Supreme Lending for this content.