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Annual Consumer Inflation Continues to Affect Mortgage Rates

Interest rates are hovering in the mid to high 6% range and all eyes are on the trajectory of inflation. The good news is that it continues to move down slowly. In February, the year-over-year reading for the Personal Consumption Expenditures (PCE) dropped from 5.3% to 5%, which is the fourth consecutive month in which it continued to decline. Inflation continues to trend lower in the right direction, though last month’s reading would have been even lower if the decelerating shelter costs seen in the real world were better reflected in the PCE report. Once this lagging shelter data catches up in the PCE report, it should cause additional downside pressure to inflation. We should start to see the benefits of this in the next few months, which will continue to put downward pressure on long-term interest rates.

Signed Contracts Show Housing Is Standing Strong

Pending home sales rose .8% from January to February which is much stronger than the expectations and marks the third straight month of increases. Pending home sales is a critical report for taking the pulse of the housing market. It is considered a forward-looking indicator of home sales because it measures signed contracts on existing homes which represent about 90% of the market. Lawrence Yun, chief economist for the National Association of Realtors noted, “After nearly a year, the housing market sector’s contraction is coming to an end. Existing home sales, pending contracts, and new home construction pending contracts have turned the corner and climbed for the past three months. Housing activity should continue to rebound during the spring buying season, especially if home loan rates move lower and hibernating buyers are motivated to resume their home search.

Media Cries Housing Crash but Appreciation Data Says Otherwise

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices declined .5% from December to January but were 3.8% higher nationwide when compared to January 2022. However, Atlanta ranks #2 nationally, with an appreciation of 8.4% from January 2022 to January 2023. The bottom line is that while home prices have softened, we are still seeing appreciation that is more in line with historical data and Atlanta seems to be bucking that trend. Inventory levels are still historically low and are likely to stay that way. Driving demand is a job market that is stronger than much of the country, a housing market that is very affordable relative to many other parts of the country and the ability to work remotely.

Tool to Track & Manage Your Home Equity

By now, you all should have received emails and phone calls from us introducing you to a fantastic new tool we are providing for free that will come to you by email each month from a company called Homebot. It will show you your new property value each month and it also tracks your loan information to show your equity position. It has a number of other fantastic features to explore as well. We added the loan information for you but if it is not correct you can go in and make any changes. Please let us know if you are not receiving this and we would encourage you to take advantage of this each month. Hope you enjoy!!