Market Update - October 18, 2024

8 -Minute Read

This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.

Rates are provided by Housing Wire in conjunction with Polly. Rates are updated in real-time. Polly data is calculated using actual locked rates. Rates are inclusive of locks that occur below par, at par and therefore consider discounts and rebates.

Market Commentary:

For the week of Oct 11th to Oct 17th, interest rates increased slightly. In general, higher rates reflect the strength in the economy that is supportive of the housing market. But notably, as compared to a year ago, rates are more than one percentage point lower, and potential homebuyers can stand to benefit.

Equity markets rallied on the news of the September rate cut. Investors believe reductions in the federal funds rate (which is a prime rate that helps to dictate mortgage rates, auto loans, credit card rates, and home equity lines of credit) will spur increases in investment and consumption, guiding the economy to a so-called soft landing instead of a recession.

After the September meeting, most members of the Federal Reserve Board indicated they would also favor cutting rates by 25 basis points at each of their upcoming November and December meetings.

Between today’s inflation news and the unexpectedly sunny jobs report on Oct. 4, investors and markets have a lot of news to digest as they consider what path interest rates will take in the months ahead. Many continue to believe that we may well see two 25-basis-point cuts by the end of 2024.

Fed Watch:

Target rate (in bps) possibilities, according to the CME Group:

Upcoming Federal Reserve Meeting

Current

(4.75% - 5.00%)

0.25% Reduction

(4.50% - 4.75%)

0.50% Reduction

(4.25% - 4.50%)

0.75% Reduction

(4.00% - 4.25%)
November 7 9.1% 90.9% 0% 0%
December 18 1.4% 21.4% 77.2% 0%
January 29 0.4% 6.9% 36.7% 56.1%

 

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A weekly market update chart titled 'A Quick Look Back,' detailing key economic events from October 11 to October 17, 2024, with columns for Event Date, Event Name, Actual Data, Forecast, Previous Data, and Commentary. On October 11, the Core Producer Prices Year-Over-Year (YoY) for September show an annual inflation rate of 2.8%, slightly above the forecasted 2.7% and an increase from the prior month’s revised 2.6%. Core producer inflation excludes volatile food and energy prices and has historically averaged 2.58% from 2011 to 2024, peaking at 9.7% in March 2022 and reaching a record low of 0.2% in October 2015. Also on October 11, Consumer Sentiment for October, as measured by the University of Michigan, fell to 68.9 from 70.1 in September, below the forecast of 70.8. This decline reflects ongoing consumer frustrations over high prices. On October 17, initial jobless claims for the week ending October 12 dropped significantly to 241,000, beating expectations of 260,000 and down from the prior week's 258,000 claims. This marks an improvement in labor market conditions. Lastly, on October 17, Retail Sales for September came in at 0.4% growth, higher than the 0.3% forecast and up from the previous month's 0.1% increase. Total retail and food service sales for September amounted to $714.4 billion, up 0.7% from August when excluding automobiles and gasoline, and up 3.7% from the previous year. Sales were up 1.7% year-over-year, showing continued growth in consumer spending.

 


Market Review:

Optimal Blue’s Production Metrics:

U.S. Housing Outlook - October 2024

Graph of the year-over-year change in inventory:

Geographic variation of average annual real estate taxes (RETs) paid:

 
House Price to National Average Wage Index:

Debt Delinquencies:

The latest NY Fed Survey of Consumer Finances is slightly worrying as it reports the percentage of households who think they will be unable to meet their debt obligations over the next three months is 14%. This is the highest percentage since 16% in 4/20. The percentage has steadily risen from a low of 10% in 2021 to 12% in 2023, to now 14%. More households continue to struggle.

- Elliot Eisenberg, Ph.D. , Economist

 

News You Can Use:



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Interest rate and annual percentage rate (APR) are based on current market conditions as of 10/17/2024, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 10/17/2024 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac's economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac's business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an "as is" basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.

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