Core inflation continues to moderate but at a slow pace
Consumer prices rose more than expected with the headline inflation increasing 0.4% month-over-month and 3.7% year-over- year in September. Energy prices, while moderated last month, continued to put upward pressure on overall inflation.
Mortgage rates back to recent highs after making progress last week
As investors continue to assess the economic outlook and the uncertainty brought on by the geopolitical tension in the Middle East, more volatility on rates should be expected in the short term.
Elevated mortgage rates keep housing sentiment at a low level
With rates rising more than 50 bps since a month ago and having been trending up for nearly six months, consumers remained downbeat about home buying conditions with only 17% expected mortgage rates to decline in the next 12 months.
CEO confidence dips as future expectations become more pessimistic
Business executives remained cautious about the economic outlook at the beginning of Q4, as nearly half (47%) of them expected general economic conditions to get worse over the next six months.
Share of first-time buyers bounced back after two years of decline
The share of homes being sold to first-time buyers increased from 33.7% in 2022 to 36.2% in 2023, according to C.A.R. 2023 Housing Market Survey.
The sharp increase in mortgage rates in the past month was due primarily to the Fed’s announcement at their latest FOMC meeting that rates will be kept “higher for longer”, which dashed market participants’ hope for more significant rate cuts in 2024.
With costs of borrowing staying high and rates likely to fluctuate in the next couple of weeks, home sales will remain soft in the near term.
SOURCE : California Association of Realtors