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The Fed decides to hold rates steady but still plans to cut rates three times by end of 2024
The recent announcement from the Federal Reserve was more positive than anticipated boosting the bond market and slightly lowering mortgage rates.
Mortgage applications pull back
Mortgage applications remained very sensitive to rate movements, as both purchase and refinance activity came in lower than the prior week. With the latest FOMC’s announcement, however, mortgage rates could inch down and should help improve mortgage activity in the coming week.
Homebuilder sentiment turns positive for the first time since July
Builders continue to offer sales incentives like mortgage rate buydowns, though fewer are reducing home prices to entice buyers. Additionally, more builders anticipate that as mortgage rates improve, particularly later in the year, more sidelined buyers will return to the market.
US residential construction rebounds strongly in February
Due to shortage of homes on the resale market, housing starts climbed 10.7% month-over-month in February. The sharp increases will continue to provide more options for buyers in the supply constrained market.
California’s jobless rate rises above its pre-pandemic average
The state's unemployment rate inched up to 5.3% in February from 5.2% in January and has risen above its pre-pandemic average. Construction and trade/transportation were the industries that posted the largest declines in jobs in California last month, and weather could be the primary reason.
The Fed delayed lowering the federal funds rate for at least six more weeks, but its latest projection suggested that the central bank still intends to have three rate cuts by the end of the year. Since the announcement, mortgage rates have moderated and should help mortgage application activity bounce back in the upcoming week.
SOURCE : California Association of Realtors
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