Mortgage rates dipped a little in the last month, while home prices appear to be leveling.
The Freddie Mac Primary Mortgage Market Survey shows a dip in the 30-year fixed mortgage rate to 6.87%, and the 15-year fixed rate to 6.13%. This survey is based on mortgage rates of purchase applications of conventional single-family conforming loans, for borrowers with good/excellent credit, and 20% down payment. These rates may include discount points to buy down the rate. Also, the rates are based on applications, not necessarily closed loans.
Values appear to be leveling off as you can see in the chart in the video. According to Redfin, in Arizona, home prices were up 3.6% as compared to last year, with a median sales price at $451,500.
Will rates continue a downward trend? Well, the Fed is watching inflation data to determine whether and when to reduce the Fed Funds rate. A couple indices they review are the Personal Consumption Expenditures (PCE) index and the Consumer Price Index (CPI). Remember, the Fed wants to get inflation down to 2%. It appears that any reductions to the Fed Funds rate will be based on economic data that shows the inflation rate is approaching 2%.
The Bureau of Economic Analysis of the US Department of Commerce publishes the PCE data at the end of each month for the prior month. The PCE measures the changes in prices of goods and services purchased by consumers in the US. The increase was 2.7% in April.
The US Bureau of Labor Statistics publishes the Consumer Price Index each month. The CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The chart in the video shows the percentage increase in prices for goods and services over the last year. As you can see, the percentage dipped a little in May, but is still over 3%.
Based on this data, it looks like it may still be some time before the Fed lowers the Fed Funds rate. Likewise, mortgage rates may remain in this range for a while.
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