Where are mortgage rates ahead of the inflation data release?

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Mortgage rates retest 1-month lows

The national average rate for a 30-year, fixed-rate mortgage dipped 0.04% to 7.12% on Monday*. Rates have continued to drift without meaningful guidance from either data or events since the last Fed meeting almost two weeks ago.

This week is about to get a bit more volatile with the release of inflation data on May 15th. A cool inflation report has the potential to spur rates lower, while a hotter than expected report could send us right back up.

Will mortgage rates fall on inflation data?

That’s the exact question that a recent article from CBS News asks.

First, they went through the recent history of inflation data to see how mortgage rates have reacted to the monthly data points.

The January 2024 report saw a rise in inflation in December 2023, and mortgage rates reacted by dipping slightly.

In February 2024, the report for January 2023 showed a dip in inflation data month-over-month. Mortgage rates reacted by dropping slightly.

The March 2024 report for February showed a slight increase, and mortgage rates followed with a slight increase.

In April 2024, the March data showed a spike on the month-over-month inflation rate, and rates also rose in tandem.

The takeaway is that mortgage rates don’t always follow inflation data, and the impact is often just a few tenths of a percentage point. Mortgage rates haven’t overreacted to hot inflation data. In fact, there’s even been at least one recent month that saw rates dip in the face of a hot inflation report.

We may not see a full reaction until the gauntlet of speakers from the Federal Reserve that we get this week complete their remarks.

Which states have the most overvalued housing markets?

Recent analysis from Fitch Ratings reviewed the areas that are seeing houses selling at prices over their long-term average. Which states are seeing properties currently overvalued? The Sun Belt is leading the way with Tennessee, Arkansas, and South Carolina seeing the largest percentage of homes selling higher than their long-term average.

Montana and Alabama rounded out the top five spots on the list.

However, the report also noted that the national median price of a home sold in December 2023 was $381,400. The only market on the list that had a median sale price higher than the national average was Montana at $535,000.

Analysis from Fitch ratings stated, “The U.S. housing market is showing early signs of normalization,” and Fitch noted that “the pace is being tempered by persistently high mortgage rates and the escalation of home prices.”  

* National average rates accurate as of 5/13/24 from MortgageNewsDaily.com and are not advertised rates from Guaranteed Rate.

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