More than mortgage rates are going down

Another day another drop.

Mortgage rates inched down again today to 5.05%* for the 30-year fixed. However, the other bright spot is gas prices. Today the national average is down to $4.18 a gallon. Why is this important beyond the numbers? The price of gas is an emotional hot button with consumers.

When prices goes up, people tend to spend less on other goods. When prices decline, people feel a little better about going out to eat or splurging on a new outdoor grill. The Fed’s hopes for a soft landing still in the cards.

Lumber prices plummet 

When the pandemic hit, states issued stay-at-home orders, so the lumber industry scaled back in anticipation of a slowdown. With America stuck at home, improvement projects became the new national past time. Suddenly, the demand for lumber went up while supplies were down. This drove wood prices through the ceiling.

Now with new home construction and renovation slowing, wood prices have dropped 68% since May of 2020. While this is great new in the moment for homeowners, it’s going to take a couple of months, if not a little longer, for these decreases to reach the consumer.

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* National average rates accurate as of 8/2/22 from Mortgage News Daily and are not advertised rates from Guaranteed Rate. 

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