Overview: : It was a very light week for economic news and a relatively quiet one for mortgage markets. The reaction to the economic reports was minor, and rates ended a little lower.
In housing news, sales of previously owned (existing) homes, which typically make up about 90% of the market, fell a little in March and are 22% lower than last year at this time. After reaching a record high of $413,800 in June, the median existing-home price is down to $375,700, again slightly lower than the median price a year ago. As has been the case for several years, inventory levels remain a big trouble spot. While they are a bit higher than a year ago, they stand at just a 2.6-month supply nationally, far below the roughly 6-month supply that is generally seen in a balanced market. Inventory levels of existing homes for sale are now shockingly over 40% lower than in 2019, before the pandemic.
On a brighter note, new-home sales, which account for the remaining 10% of the market, surprised investors with a substantial increase of 10% from February, rising to the highest level since March 2022. With these gains, new-home sales are only slightly lower than last year at this time. The median new-home price of $449,800 is 3% higher than a year ago.
The latest survey of consumer confidence from the Conference Board revealed increased concerns about future economic conditions across a broad range of ages and household incomes. The index declined to 101.3, well below the consensus forecast and the lowest reading since July 2022. According to the survey, the number of people expecting to purchase major appliances fell to the lowest level since 2011, and planned vacations and motor vehicle purchases also posted sharp declines. Higher interest rates and troubles in the banking industry have caused many people to be more cautious about their spending decisions.
Existing-Home Sales (millions)
Looking ahead, the next Federal Reserve meeting will take place on May 3, and most investors expect that there will be another 25 basis-point increase in the federal funds rate. They will look for hints about whether this will be the last rate hike in the current cycle. For economic reports, first quarter gross domestic product (GDP), the broadest measure of economic activity, will be released on April 27. Personal Income and Outlays and the core Personal Consumption Expenditures (PCE) Price Index, the inflation indicator favored by the Fed, will come out on April 28. The Institute for Supply Management (ISM) Manufacturing Index will be released on May 1 and the ISM Services Index on May 3.