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A glass half-full optimists can point to the increasing likelihood that inflation has at least stopped getting worse in the latest report released last week. While it is encouraging, it is also doubtful that the news on “mild” deceleration in price growth will be enough for the Federal Reserve to signal a shift in tone. With rates likely to remain elevated in the short term, we expect the ongoing monetary policy to weaken consumer demand, slow down economic activity, and cool off home price growth in the second half of the year.
Weekly average active listings near last year’s peak – but at what cost: Active listings have been heading into the right direction since the beginning of the year. Seeing more listings available for sale is encouraging since supply has been super-tight in the last two years. While this can mean more options for homebuyers, growth in active listings on the market can either come from an increase in newly added listings, or more homes staying on the market due to a drop in housing demand. The most recent weekly MLS data suggests that the latest improvement in housing supply was attributed by a bit of both. Average weekly new listings dropped from the week prior and while they remained above 6K, average new listings were slightly behind last year’s level. On the other hand, the weekly average daily sales have dropped for the last two consecutive weeks, and pending sales experienced the biggest drop off since the beginning of the year. These are likely in response to the mounting constraints to affordability as mortgage rates and home prices continue to rise, pushing potential buyers out of the market.
Mortgage rates climb on: The average 30-year fixed-rate mortgage inched up from last week to 5.30% according to Freddie Mac’s weekly survey. This is more than 200 basis points from the same time last year when the rate was 2.94%. With rates remaining high for the rest of the year as the Fed continues its aggressive approach to battle inflation, homebuyers’ purchasing power will likely be squeezed further as the cost of borrowing increases.
Mortgage applications are holding up despite rate hikes: Prospective buyers are showing some resiliency to higher rates as mortgage applications increased for second consecutive week despite interest rates rising to their highest level since 2009, according to Mortgage Bakers Association. Their survey results, however, also showed that more borrowers seemed to be using adjustable-rate mortgages (ARM), which typically have lower rates than fixed-rate mortgages, to lower their costs of borrowing. The share of ARMs increased to 10% of overall loans from just 3% at the beginning of the year.
Inflation eases from March’s peak but remains near 40-year high: Despite Consumer Price Index (CPI) decelerating both on a month-to-month and a year-over-year basis, inflation remained elevated with prices up 8.3% from a year ago for all goods and 6.2% for core goods excluding energy and food. While the directional improvement is encouraging, more households are feeling the squeeze from higher prices. The share of consumers who feel their household finances have gotten worse relative to a year ago increased nearly 10 percentage points to 47% according to the University of Michigan’s consumer sentiment survey.
Consumer sentiment toward housing hits lowest level in two years: The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 4.7 points to 68.5 in April, reaching its lowest level since May 2020 as consumers surveyed continued to report difficult homebuying conditions amid budget-tightening constraints due to inflation, higher cost of borrowing, and record-high home prices.
NFIB Small Business Index was unchanged in April at 93.2: While the drop was not much of a surprise, the index has remained under its historic 48-year average for the past four months. With the Producer Price Index (PPI) rising 11% in April as input prices keep accelerating, a record 32% of small business owners stated that inflation was their single most important problem in operating their business as they felt squeezed by rising costs and were unsure if they could continue to pass on higher costs to consumers.
If you're ready to discuss today's market and whether now is a good time for you to buy or sell, give me a call at (562) 900-9430.
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2 Beds | 1 Bath | 1,158 SqFt | $785,000
Beautifully updated Craftsman home located in the Historic Willmore District overlooking Drake Park on a huge 8,536 sf lot.
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2 Beds | 1 Bath | 949 SqFt | $840,000
Looking for a home that is in pristine condition, immaculately clean, open, bright & cozy, in a premier location, on a tree lined street and with "wow factor" curb appeal and reasonably priced? Look no further.
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3 Beds | 4 Baths | 3,358 SqFt | $1,819,798
Absolutely beautiful golf course, pool home in Lakewood Country Club Estates.
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2 Beds | 1 Baths | 702 SqFt | $550,000
Must see remodeled two-bedroom one bath home in Long Beach! Close to schools, shopping, restaurants, and freeways this home is conveniently located to all.
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2 Beds | 2 Baths | 1,271 SqFt | $610,000
Live the beach life at this lovely resort style condo!!! Large 1,271sf, 2 bedroom, 2 bath end unit condo with a bonus room/den located near CSULB.
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2 Beds | 2 Baths | 959 SqFt | $476,000
Great location just 2 blocks from the beach in Long Beach. This condo is on the first floor, faces towards the ocean, and the floor to ceiling windows fill the home with wonderful natural sunlight.
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2 Beds | 2 Baths | 1,039 SqFt | $477,000
Close to the East Village Arts District, transportation, trendy restaurants, and just 3 blocks away from the beach.
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3 Beds | 2 Baths | 2,147 SqFt | $955,000
Amazing loft at the Kress Lofts in Downtown Long Beach. This was the architect's home and features the largest floor plan in the building.
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2 Beds | 3 Baths | 2,014 SqFt | $1,575,000
Absolutely breathtaking ocean views from every room in this oceanfront penthouse condo at the Ocean Club
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2 Beds | 2 Baths | 1,328 SqFt | $637,000
Beautiful top floor 2 bedroom, 2 bath end unit condo located just 6 blocks to the beach. Light and bright with high vaulted ceilings.
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1 Bed | 1 Bath | 492 SqFt | $425,000
Beautifully remodeled Victorian style single family home in the Willmore Historic District in downtown Long Beach
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2 Beds | 2 Baths | 930 SqFt | $415,000
Nicely updated 2 bedroom, 2 bath condo in Alamitos Beach. Inside laundry and 2 side by side parking spaces.
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4 Beds | 2 Baths | 2,378 SqFt | $1,025,000
Beautiful and rare on a lot property in Historic California Heights. You will love the Spanish charm of this home featuring wood floors, coved ceilings, and arched entryways.
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