Weekly Real Estate Monitor for Jan. 1-5

At the onset of the new year, mortgage interest rates exhibited minimal fluctuation but we need more time to gather more data in the new year to truly get a sense of where they are headed. Following a gradual decline over the past nine weeks, there was a slight uptick, starting Jan 2nd at 6,72% (up + 0.05% from the last week of 2023) and 6.76% as of yesterday. The expectations for the overall trend in mortgage interest rates throughout 2024 lean towards a decrease, despite the ongoing adjustments weekly, the average rate is expected to experience a general decline.

As prospective home buyers gear up for the spring market, understanding the pros and cons of the economics of this market becomes crucial for securing the most favorable rate and terms. Furthermore, individuals looking to optimize their mortgage interest rate should focus on improving their debt-to-income ratios and credit scores, as these factors play a role in determining the rate they qualify for and a leading indicator of how a lender or lending institution qualifies you ( a buyer) for a loan. Feel free to watch my video of How A Mortgage Works.

Jobs Report Update

The latest employment figures present a mixed scenario. As per the household survey, there was a decline of 683,000 employed Americans in December. Despite this, the unemployment rate remained stable at 3.7% because 845,000 individuals exited the labor force without actively seeking employment. This survey data is considered less reliable than company payroll data, which indicates a job gain of 216,000. Additionally, the most recent average hourly earnings saw a 4.1% increase, reaching $34.27. Although this marks an acceleration from the previous month's 4.0%, it is a decrease from the 4.8% reported a year ago.

Wall Street places greater emphasis on the more dependable payroll data and the pressure of wage inflation. Consequently, the bond market anticipates a more cautious stance from the Federal Reserve regarding interest rate reductions this year. The benchmark 10-year Treasury yield has experienced a slight increase, suggesting that the recent declines in mortgage rates are unlikely to persist unless economic data indicates a softer inflation outlook.

Beyond the job market, the U.S. government is seeking to issue more bonds to address its substantial budget deficit, potentially requiring higher interest rates to attract more bond buyers. However, some bond investors are also uneasy about the prospect of a government shutdown.