What did January 2024 inflation data say?
Personal consumption expenditures (PCE) price index from January 2024 was released yesterday. The report shows that costs excluding food and energy rose 0.4%, and 2.8% from a year ago. This is still off from the Federal Reserve’s 2% target but didn’t show any massive spikes or areas of great concern for the market.
The headline PCE, that includes food and energy costs, increased 0.3% month-over-month and 2.4% yearly.
Personal income also rose 1%, crushing the 0.3% forecast, while spending decreased 0.1%, missing the 0.2% forecast.
Stephen Gallagher, chief U.S. economist for Societe Generale, stated, “Overall, [the report] is meeting the expectations, and some of the worst fears in the market weren’t met. The key is we’re not seeing the broad nature of increases that we had been more fearful of.”
How did mortgage rates react to inflation data?
The national average for a 30-year, fixed-rate mortgage rate dipped 0.05% to 7.10%* yesterday. The day began the day with bonds in weaker territory but rallied after the early economic data. The rally helped the mortgage rate market find direction, and it ended the day lower than it started.
Next week Federal Reserve chairman Jerome Powell will testify to Congress on Wednesday and Thursday. That’s the next event that may provide clear direction for the bond market.
Housing inventory saw the biggest spike in 3 years
Recent data showed that new home listings for sale in February 2024 increased 12.9% year-over-year, while total home inventory also increased.
This bodes very well for the upcoming Spring market, as the market has struggled with available inventory.
Brynn Rea, a Redfin real estate agent in Spokane, WA, said, “House hunters are out there, and competition picks up every time mortgage rates decline a bit. I’m telling buyers who can afford it to look now while they have more breathing room and less competition.”
* National average rates accurate as of 2/29/24 from MortgageNewsDaily.com and are not advertised rates from Guaranteed Rate.
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