Weekly Real Estate Monitor for Mar. 4-8

Like last week, mortgage interest rates saw even more relief and continued to trended downward from 7.08% the previous week. Rates started the week at 7.09% and decreased throughout the week to 6.97% as of yesterday. Consequently, many borrowers can expect quotes ranging from 7-7.125% for top-tier scenarios, with some fortunate individuals securing rates as low as 6.875%. It is important to note that top-tier scenarios are based on credit scores of 780+ and a minimum down payment of 20% for purchases.

The resurgence in mortgage rates can be attributed to the same economic factors that led to rate increases three weeks ago. On February 13th, a surge in inflation data caused rates to spike. While the subsequent two weeks lacked significant data releases, the recent data has been more favorable for rates since last Thursday. It has required a combination of multiple reports to counteract the impact of the inflation data from the 13th. Looking ahead, an upcoming report later today Friday holds equal potential to influence the market significantly.

Positive Housing Data Increases Mortgage Applications by 9.7%

This slight improvement may be the first initial signs of a spring market awakening. The Mortgage Bankers Association (MBA) disclosed that its Market Composite Index, which gauges application volume, surged by 9.7% on a seasonally adjusted basis compared to the previous week. The Mortgage Bankers Association (MBA) Senior Vice President and Chief Economist, Mike Fratantoni remarked, "The recent inflation data did not significantly deviate from expectations, leading to a slight decrease in mortgage rates, with the 30-year fixed rate dipping slightly to 7.02% last week. Mortgage applications notably increased compared to the prior week, which encompassed the President's Day holiday. Notably, purchase activity – especially for FHA loans – exhibited strong growth, underscoring how responsive first-time homebuyers are to even minor shifts in rate trends." Fratantoni also highlighted positive trends in new listings from other housing data sources, signaling optimism for the upcoming spring buying season amidst limited available inventory for sale.

Jobs Report Update

The most recent employment data presented a varied outlook. February saw a robust increase of 275,000 net new payroll jobs, bringing the total jobs count to 5.5 million higher than the pre-COVID peak in early 2020. However, the unemployment rate rose to 3.9% due to a different job measurement method from a household survey, which indicated 184,000 fewer workers. While the monthly wage growth of 0.14% was the slowest in two years, the annual wage increase of 4.3% outpaced the consumer price inflation of 3.1%.

The continuous growth in job numbers contributes to sustained demand in real estate for residential properties, retail spaces, warehouses, and travel accommodations, although not necessarily for office spaces. Short-term property purchase decisions are influenced by mortgage rates and inventory levels. Home sales in 2023 hit a three-decade low, with current payroll job figures at 158 million compared to 117 million during a similar period of low home sales activity. This suggests significant latent real estate demand waiting to engage once short-term conditions become more favorable.