What did the latest U.S. housing starts data say?
Construction of new homes in the U.S. jumped 7% in September 2023. This rebound came after a 1.5% drop in the previous month. The annual pace for new homes now sits at 1.36 million units.
Single-family home construction was up 3.2% in September, while apartment building construction rose by 17.1%.
Permits for single-family homes were also up 1.8% in September. Roughly 1.68 million homes were under construction in September.
What’s the market expecting from Fed Chair Powell?
Federal Reserve Chairman Jerome Powell will deliver an address on Thursday, and it may end up being a key policy update. Other Fed Presidents and Governors have spoken this week, and the theme of ‘higher for longer’ was echoed by almost all of them when it came to interest rates.
Markets are largely expecting the Fed to hold steady with rates in November but will be listening closely for any details Powell may offer. If Powell comes across as dove-ish and indicates that rate hikes might be over for the year, the bond market may react positively. However, if his tone comes across as hawkish, the market may have a negative reaction.
It’s widely expected that his message will have three parts. First, the Fed needed to raise rates quickly to combat inflation. Second, the Fed needed to reach peak rate, which is part of the current discussion. Third, they need to figure out how long to leave rates elevated. He’s likely to mention the strength of the economy and the positive direction some of the inflation metrics have gone in.
Are adjustable-rate mortgages making a comeback?
According to a recent report from CNN, adjustable-rate mortgages are gaining in popularity among current homebuyers. Recent data showed that ARM mortgage applications jumped by 15% last week, and this could be the start of a trend.
Bob Broeksmit, CEO of MBA, stated, “With mortgage rates well above 7%, some prospective homebuyers are turning to ARMs to lower their monthly payment in the short term amidst these high mortgage rates.”
ARMs offer a fixed mortgage rate for a set period. The period of is usually five, seven, or 10 years. After the initial period, the interest rate resets to the current market levels. A 5/1 ARM has a fixed rate for five years, and then resets every year after the initial period.
Are you interested in applying for ARM? Check out the current adjustable-rate mortgage options from Guaranteed Rate and apply today!
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