Mortgage rates surpass 7%, with applications up 3.3%. Retail sales grow 0.7%, but home sales dip amid rising prices and fluctuating rates.
Mortgage rates moved up for the fourth week in a row, increasing 22 basis points from the prior week according to the Freddie Mac Primary Mortgage Market Survey released April 18th. This marks the first time this year that the 30-year fixed-rate mortgage average surpassed 7 percent. As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year. Last week, purchase applications rose modestly, but it remains unclear how many homebuyers can withstand increasing rates in the future.
Mortgage applications increased 3.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 12, 2024. “Rates increased for the second consecutive week, driven by incoming data indicating that the economy remains strong, and inflation is proving tougher to bring down.” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Despite these higher rates, application activity picked up, possibly as some borrowers decided to act in case rates continue to rise.”
Retail sales increased 0.7% for the month, considerably faster than the Dow Jones consensus forecast for a 0.3% rise though below the upwardly revised 0.9% in February, the Commerce Department reported Monday. The core control group, which strips out several volatile measures and is in the formula to determine gross domestic product, also increased 1.1%. “Alongside the recent resurgence in employment growth, the continued resilience of consumption is another reason to suspect the Fed will wait longer before starting to cut interest rates, which now we think won’t happen until September,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
Existing-home sales slipped in March, according to the National Association of REALTORS®. Total existing-home sales decreased 4.3% from February to a seasonally adjusted annual rate of 4.19 million in March. Year-over-year, sales waned 3.7%, down from 4.35 million in March 2023. Total housing inventory registered at the end of March was 1.11 million units, up 4.7% from February and 14.4% from one year ago. “Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” said NAR Chief Economist Lawrence Yun. He added. “Frankly, it’s a great time to list with ongoing multiple offers on mid-priced properties and, overall, home prices continuing to rise.”
