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August
11

Economic News from Idaho Central Credit Union

 

 

Unexpectedly Strong Job Gains Across the Board

With the release of last week's Employment report, the United States reported unexpectedly strong job gains across the board. With this stronger than expected economic data, mortgage rates received an unfavorable reaction.

Overall, the key labor market report far exceeded the forecasts. Thus, mortgage rates ended the week higher.

Employment Report Reveals Unexpectedly Strong Job Gains

Every month, the Employment report represents the most highly anticipated data. With Friday's release, the data revealed unexpectedly strong job gains. Against a consensus forecast of 250,000, the economy gained 528,000 jobs in July 2022. Notably, leisure and hospitality displayed the best performance with a gain of 96,000 jobs. Now, the economy holds more jobs than in early 2020, prior to the pandemic.

Meanwhile, the unemployment rate fell from 3.6% to 3.5%. While unemployment fell below the consensus forecast, it also matched the lowest level since 1969. Additionally, investors and analysts look to average hourly earnings for wage growth indications. Overall, the latest average hourly earnings report showed an impressive 5.2% higher than a year ago, well above the consensus forecast.

ISM Reporting Paints Picture of Shifting Consumer Spending

Aside from the unexpectedly strong job gains, the most recent economic indicators from the Institute of Supply Management (ISM) painted a picture of shifting consumer spending habits. The national services sector index ended several straight months of declines with an unexpected jump to 56.7, well above the consensus forecast of 54.0.

By contrast, the national manufacturing sector index posted an expected drop to 52.8. Still, levels above 50 indicate sector expansion. Consistent with other recent data, these two reports suggest that consumers are purchasing more services and fewer goods.

Investors Anticipate 75-Basis Point Increase in September

Following news of unexpectedly strong job gains and an expanding National Services Sector Index, investors anticipate another large rate hike in September. Last week, most investors priced in a 50-basis point rate hike. Currently, the majority price in a 75-basis point increase while debating next year's events.

Presently, investors plan for additional rate hikes later this year. Meanwhile, next year should lead to rate cuts as economic growth and inflation decline. Federal Reserve comments suggest that investors price too high a probability of rate cuts next year given the uncertain inflation outlook.

Looking Ahead After Unexpectedly Strong Job Gains

After the unexpectedly strong job gains, investors watch for additional Federal Reserve guidance on the pace of future rate hikes and bond portfolio reduction. Beyond that, they focus on the inflation data.

The Consumer Price Index (CPI) was released on Wednesday. Investors and analysts widely follow CPI for price changes covering a broad range of goods and services. Also, the Producer Price Index (PPI) comes out on Thursday of next week. PPI measures price changes for intermediate goods used to make finished products.

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We understand that no two paths to buying a home are the same. Whether you're a first-time homebuyer or a seasoned real estate mogul, we have a variety of products and loans designed specifically to meet your needs. We offer local underwriting and fast approvals to save you time and money. We have options for down payments and additional resources like our Finally Home! online program to help guide you through the home buying process. Contact one of our home loan specialists to discuss your options today!

 

August
10

Median Home Prices Fall Slightly from June

From our Friends at Boise Regional REALTORS®

Home Prices Adjust to Market Changes

The median sales price for homes in Ada County was $589,990 in July, down 0.4% from June but 9.3% higher than July 2021. Buyers who purchased in recent months faced larger monthly mortgage payments due to higher mortgage interest rates and home prices, which has had a cooling effect on the demand for housing. As a result, home price growth and sales have slowed.  

This point is made more obvious when looking the existing/resale segment, which had a median sales price of $549,000 in July, a 3.7% decrease from the previous month, but a 4.6% increase from a year prior. The existing segment can react more quickly to changes in what buyers are willing or able to pay in contrast to new construction which must factor in land, labor, materials, and other fixed costs into the final home price.  

The month-over-month price declines indicate that the local housing market continues to be driven by supply versus demand, not speculation like we experienced over a decade ago. As demand decreases and supply increases, prices are responding accordingly.  

There were 2,408 homes listed for sale at the end of July, a 128.2% increase from July 2021, and the highest level of inventory we've seen since September 2015. Even with the uptick in inventory, the months supply of inventory in July was 2.8 months, meaning, if no additional homes were listed, the supply of homes would run out in about three months. A "balanced" market, or one that does not favor buyers or sellers, is typically between 4-6 months of supply.  

July also marked the fifth consecutive month of year-over-year declines in the number of sales. There were 685 closed home sales last month, down 33.8% compared to July 2021. There have been 5,370 total sales year-to-date, 707 fewer, or 11.6% less, than this time last year.   

Metrics that indicate competition in the market continued to show signs of normalizing in July. Focusing on the existing/resale segment, homes that closed last month spent an average of 21 days on the market before going under contract, compared to 11 days in July 2021. Additionally, the average original list price received for existing homes in July was 95.6%, which means that on average, buyers paid less than asking through a lower accepted offer, price reductions, or seller concessions. In July 2021, the average original list price received was 101.3%, meaning that on average, buyers paid more than asking price.  

Higher mortgage interest rates have done what the Fed intended and cooled demand for housing, which in turn, has also slowed sales and price growth. However, it's important to remember that 2020 and 2021 were out of the norm for our market — we experienced a surge of demand for housing while we had record low inventory, which drove home prices up at a very rapid rate. Today, we're in the midst of a shift to a more normal market, one where bidding wars are less common, buyers have more time and choices, and appraisals and home inspections don't have to be waived in order for an offer to even be considered.

Whether you're ready to buy today or would like to purchase within the next two, five, or even ten years, work with trusted advisors to make a plan to reach your goals. Taking important steps today, such as improving your credit, researching down payment programs, and saving for your down payment in a tax-sheltered savings account can really make a difference when you're ready to make a move.

To view the Treasure Valley homes currently for sale, CLICK HERE.

July
15

For the Third Time, CB Scores Top in Agent Satisfaction

Coldwell Banker Scores First in Agent Satisfaction. Again.

Confucius said, "Choose a job you love, and you will never have to work a day in your life." 

The real estate professionals across the Coldwell Banker brand are passionate about their industry – and about their brand. For the third time, Coldwell Banker Real Estate ranked #1 in agent satisfaction in the annual "Agent Priorities" report conducted by Quester.

Designed to keep what's important to agents top of mind, the report zeroes in on topics such as work/life balance, brand image, support, tools, and culture. Knowing what makes an agent more likely to stay with a company is a key component in what brokerages can do to foster positive work environments and grow their agents' businesses.

On a local level, Coldwell Banker Tomlinson combines the strength of the national tools with additional services designed to help our Realtors® list, sell, and learn.

Full-time managing brokers are in place to provide immediate assistance. Offices are staffed with Agent Services Experts (ASEs) to help with marketing, paperwork, and training. A company-wide marketing team is in place to create campaigns that support current market trends, listing types, and services.

With continuing education an important aspect of any business, Coldwell Banker Tomlinson offers in-house classes, regular lunch 'n' learn trainings, continuing education at no cost, and national certifications and classes.

To read the results of the report, visit the Coldwell Banker Blue Matter blog.

July
14

Strong Job Gains in June

 

 

More than 350k Jobs Added to the Economy in June

Job Gains were better than predicted despite a consensus forecast of just 250,000, the economy added 372,000 jobs in June. This growth is right in line with the gains seen over the last few months. The unemployment rate held steady at 3.6%.  This is just above the lowest level since 1969. Average hourly earnings, an indicator of wage growth, were an impressive 5.1% higher than a year ago. Although it was down from an even larger annual rate of increase of 5.3% last month.

Job Gains Show Labor Market Strength

The JOLTS report measures job openings and labor turnover rates. The latest JOLTS report indicated that the labor market remains very tight. At the end of May, there were a massive 11.3 million job openings. This is down a little from the record high in March, but over 4 million more than in January 2020 prior to the pandemic.

There were 1.9 job openings for every unemployed worker. High level of openings reflects a strong labor market, as companies struggle to hire enough workers with the necessary skills. A very large number of employees also willingly left their jobs in January. This signals strength in the labor market. Workers usually quit only if they expect that they can find better jobs.

Job Gains Grew as Did Mortgage Rates

Job gains may mean a stronger labor market, but not necessarily a stronger economy. The minutes from the June 15 Fed meeting released last Wednesday significantly contained no surprises. To help the economy recover from the pandemic, the Fed put in place extremely loose policy measures. With the recent surge in inflation, officials have begun to tighten. The minutes confirmed that fighting inflation is the primary goal now.

Aggressive rate hikes likely will continue, even at the risk of slowing the economy. When the federal funds rate has climbed to a more "neutral" level, meaning it neither boosts nor restrains economic growth. Moreover, officials will evaluate whether to continue tightening to a restrictive stance. The minutes emphasized that the Fed wants to prevent expectations for a long cycle of higher prices from becoming "entrenched."

Looking A Head at Inflation & Retail Sales

Looking ahead, job gains aren't the only thing investors are keeping an eye on. They will continue to look for additional Fed guidance. Investors are keeping an eye on the pace of future rate hikes and bond portfolio reduction. Beyond that, the Consumer Price Index (CPI), was released on Wednesday. CPI is a monthly inflation indicator that looks at price changes for a range of goods and services. Retail Sales will come out on Friday, a key indicator of the health of the economy. Consumer spending accounts for over two-thirds of U.S. economic activity.

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We understand that no two paths to buying a home are the same. Whether you're a first-time homebuyer or a seasoned real estate mogul, we have a variety of products and loans designed specifically to meet your needs. We offer local underwriting and fast approvals to save you time and money. We have options for down payments and additional resources like our Finally Home! online program to help guide you through the home buying process. Contact one of our home loan specialists to discuss your options today!

 

July
13

Cooling Demand Slows Home Price Growth

From our Friends at Boise Regional REALTORS®

Median Sales Prices Drop Slightly in June

After passing the $600,000 mark in May 2022, the median sales price for homes in Ada County dropped to $592,090 in June. This was 12.8% higher compared to the same month a year ago. Since 2005, the average year-over-year percent change in home prices in Ada County has been 8.1%.

MSP and Percent Chg YOY - June 2022

The incredible price growth we've seen since the onset of the pandemic was fueled by a rapid increase in demand for housing as people transitioned to remote work, the continued household formation of millennials, and historically low mortgage interest rates. With an already undersupplied housing market prior to the pandemic, prices shot up as demand outpaced supply.

We've seen the buyer pool shrink due to higher mortgage rates and home prices. Cooling demand has given inventory a chance to catch up a bit, giving the remaining buyers more options.

There were 2,135 homes available for sale at the end of June, a 192.9% increase from June 2021, and the highest inventory we've seen since September 2016. Even with the welcome inventory gains, the months supply of inventory in June was 2.4 months. A "balanced" market, or a market that does not favor buyers or sellers, is typically between 4-6 months of supply.

Metrics that indicate competition in the market continued to show signs of normalizing. Focusing on the existing/resale segment, homes that closed last month spent an average of 14 days on the market before going under contract, compared to 10 days in June 2021. Additionally, the average original list price received for existing homes in June was 98.4%, which means that on average, buyers paid less than asking through a lower accepted offer, price reductions, or seller concessions. In June 2021, the average original list price received was 103.9%, which means on average, buyers paid more than the asking price.

The housing market conditions we experienced for the last two years were unique. Historically low inventory, coupled with rampant demand, resulted in above-average price growth and a highly competitive market. The changes we're seeing in price growth, inventory, and slower market times is moving us toward a more normal market — one where bidding wars are the exception and not the rule, and buyers aren't having to make split-second decisions and waive contingencies for their offer to even be considered.

Sales also continued to lag in June. There were 818 closed home sales last month, down 16.0% compared to June 2021, and the fourth month of consecutive year-over-year declines.

As the market shifts, sellers may have to adjust their expectations slightly. Offers may not fly in within the hour or first day you list, and your home may not sell for over list price. This isn't necessarily a bad thing — in fact, it may make your experience less stressful, and sellers are still receiving great value for their homes. Your best bet for selling in today's market is to price your home appropriately, based on the relevant data, comparables, and expertise offered by your real estate agent, and then allow your agent to market your home on the multiple listing service to reach the widest audience possible.

Whether you're ready to buy today or would like to purchase within the next two, five, or even ten years, work with trusted advisors to make a plan to reach your goals. Taking important steps today, such as improving your credit, researching down payment programs, and saving for your down payment in a tax-sheltered savings account can really make a difference when you're ready to make a move.

To view the Treasure Valley homes currently for sale, CLICK HERE.

June
15

Financial News from Idaho Central Credit Union

 

 

High Inflation Leads to Reduced Mortgage Applications

In recent months, high inflation (and higher mortgage rates) took a large toll on mortgage application volumes. Now, they've dropped to the lowest levels in 22 years. The rate hike has been implemented to fight against high inflation. According to the latest data from the Mortgage Bankers Association (MBA), average 30-year fixed rates rose 2.0% higher year over year.

Purchase applications are down 21% from last year at this time. Applications to refinance a loan have plunged a shocking 75% from one year ago. This year, MBA forecasts total mortgage originations to decline over 35% lower than last year. Analysts attribute this to the massive decline in refinancing.

High Inflation

Inflation remained the focus for investors this week, and the latest readings came in stronger than expected, at or near the highest levels in decades. The European Central Bank also revealed a more aggressive stance to fight inflation. As a result, mortgage rates ended the week higher.

As an inflation indicator, Consumer Price Index (CPI) looks at price changes for a broad range of goods and services. Core CPI excludes the volatile food and energy components and provides a clearer picture of the longer-term trend. In May, Core CPI increased 6.0% higher than a year ago. As a result, Core CPI decreased from an annual rate of increase of 6.2% last month. However, CPI hovers far above the readings around 2.0% seen early in 2021.

Supply & Demand & Inflation

As the economy has steadily recovered from the pandemic, strong consumer demand, supply constraints, and surging commodity prices have pushed prices much higher for a wide range of goods and services. The conflict in Ukraine and the recent shutdowns in China due to COVID-19 have worsened shortages for many key items.

Over time, supply chain disruptions will ease, and Fed tightening will reduce the pressures from high inflation, but it is not clear how quickly this will occur.

European Interest Rates

At its meeting on Thursday (6/9), the European Central Bank (ECB) announced that it intends to raise interest rates by 25-basis points at its next meeting in July. It also plans to hike rates again in September by either 25 or 50-basis points depending on whether prices show signs of easing by then.

One primary reason for its monetary policy tightening is that inflation in the eurozone reached a record high in May. The ECB also significantly raised its forecast for annual inflation for 2022 from 5.1% to 6.8%. 

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We understand that no two paths to buying a home are the same. Whether you're a first-time homebuyer or a seasoned real estate mogul, we have a variety of products and loans designed specifically to meet your needs. We offer local underwriting and fast approvals to save you time and money. We have options for down payments and additional resources like our Finally Home! online program to help guide you through the home buying process. Contact one of our home loan specialists to discuss your options today!

 

June
10

Ada County Home Prices Up, Sales Down in May

From our Friends at Boise Regional REALTORS®

Ada County Home Prices Rose Again in May

The median sales price for homes in Ada County reached $602,250 in May 2022, an increase of 16.1% compared to the same month last year, and a new record for the county.

As we saw in March and April, higher prices in the new construction segment contributed to the overall price jump. New home sales made up 28.2% of all sales in May with a median sales price of $639,105, up 17.5% from last year. Home prices also rose to a new record in the existing segment with a median sales price of $586,750, a gain of 16.0% over last year.

There were 894 closed home sales in May 2022, a decrease of 5.8% compared to May 2021, and the third month of consecutive year-over-year declines.

While continued price growth is somewhat puzzling when national economists are predicting a slowdown in prices and sales due to higher mortgage rates and home prices, the data is also beginning to show signs of a shift when it comes to pending sales or properties with an accepted offer that are expected to close within 30-60 days.

In Ada County, there were 1,446 pending sales in May, down 12.7% compared to the same month a year ago. Pending sales have declined year-over-year each month since May 2021.

"Pending contracts are telling, as they better reflect the timelier impact from higher mortgage rates than do closings," said Dr. Lawrence Yun, NAR's chief economist. Referring to the national sales data as a whole, Dr. Yun noted that, "The latest contract signings mark six consecutive months of declines and are at the slowest pace in nearly a decade."

Competition in the market waned some compared to a year ago. Existing homes that closed last month spent an average of 11 days on the market, compared to eight days in May 2021. Additionally, 50.7% of buyers paid over list price, resulting in an average original list price received of 100.9% for existing/resale homes in May 2022, compared to 105.0% in May 2021.

Agents are used to fielding questions about what's happening in the market, and today's market is no exception. Higher rates, price growth, and economic uncertainty are top of mind. but prospective buyers will have more options than have been available in over two years because of the increases in housing inventory we've seen in recent months. On the flip side, sellers have continued to receive great values for their homes.

Whether you're ready to buy today or would like to purchase within the next two, five, or even ten years, work with trusted advisors to make a plan to reach your goals. Taking important steps today, such as improving your credit, researching down payment programs, and saving for your down payment in a tax-sheltered savings account can really make a difference when you're ready to make a move.

To view the Treasure Valley homes currently for sale, CLICK HERE.

May
10

Upward Climb Continues: Another Record for Ada County

From our Friends at Boise Regional REALTORS®

Ada County Home Prices Set Another Record

The median sales price for homes in Ada County reached $595,000 in April 2022, an increase of 23.9% compared to the same month last year, and a new record for the county.

Higher prices in the new construction segment played a large part in the overall price jump. New home sales made up nearly a third of all sales in April with a median sales price of $645,000, up 36.7% from last year. However, home prices rose across the board, with the median sales price for existing/resale homes reaching $570,000, a gain of 16.9% over last year. These were record highs for both segments.

Mortgage rates also rose in April, with the 30-year fixed-rate mortgage average reaching 5.1% at the end of the month, according to data from Freddie Mac. National economists have predicted that the increase in mortgage rates will eventually slow the market, but we haven't seen a price slowdown in our local sales data yet. It's important to remember that homes that closed in April likely went under contract in February and March, so we may not see the immediate impact of rates on prices for a few months. Pending sales, or those with an accepted offer that are expected to close in the next 30-60 days, may provide a better indication of how rates are affecting our market at this time.

There were 1,525 pending sales at the end of the month, a 12.1% decline from April 2021, and 815 total sales for the county in April, down 17.0% year-over-year. The existing/resale segment claimed 586 of those sales, which was a drop of 12.3% compared to last year. Higher home prices, coupled with higher mortgage rates, which results in higher monthly payments for buyers who are financing a home purchase, may be hampering sales.

Looking specifically at existing/resale sales data in April, 53.2% of buyers paid over list price, indicating that competition remained strong, particularly at the median and lower price points. While it may seem obvious, it means nearly half of all buyers did not pay over list, resulting in an average original list price received of 101.0% for existing/resale homes in April 2022, compared to 104.9% in April 2021.

Buyers may be discouraged by increasing rates and prices, but there is some good news — in April, inventory increased by 170.0% compared to the same month last year. While supply is still constrained, especially at the lower price points, more year-over-year inventory is a sign we may be seeing a shift to a more balanced market.

There is some uncertainty as to how inflation, higher mortgage rates, and other economic factors will affect the residential housing market; however, REALTORS® understand that each homeowner and buyer's situation is unique, and help their clients make decisions based on factors that are within their control.

Whether you're ready to buy today or would like to purchase within the next two, five, or even ten years, work with trusted advisors to make a plan to reach your goals. Taking important steps today, such as improving your credit, researching down payment programs, and saving for your down payment in a tax-sheltered savings account can really make a difference when you're ready to make a move.

To view the Treasure Valley homes currently for sale, CLICK HERE

May
5

Financial News from Our Partners at Idaho Central Credit Union

 

 

Mortgage Rates Steady at Long-Term Highs Ahead of Fed

MAY 3, 2022 - Mortgage rates hit their highest levels since 2009 yesterday amid the fastest spike since the early 1980s.  Today's rates were very similar on average, but the bond market left some room for mortgage lenders to offer improvements during the day.  A few of them did, but bond gains evaporated in the afternoon, resulting in rates returning back to long-term highs by the close.

As for motivations, today's volatility wasn't overtly connected to any individual root cause.  The best cases for correlation surround the big picture.  There, the obvious motivations continue to be inflation and the Fed's attempts to address it.  We'll get the latest dose of Fed strategy confirmation in tomorrow's (5/4) official policy announcement and press conference.

The Fed is widely expected to hike its policy rate by 0.50%, but it's important to understand this has nothing to do with the average mortgage.  The mortgage market adjusted for this probability long ago, and even then, mortgage rates are based on longer-term bonds whereas the Fed Funds Rate dictates loans that last less than a day.  Sometimes overnight rates and long-term rates correlate, but their performance varies so much over time that it makes no sense to infer any impact on mortgages from changes in Fed Funds.

Of more consequence will be the way the Fed implements its balance sheet normalization plans.  These are just fancy words to say the Fed will soon be buying even fewer bonds.  This bond buying has a far more direct effect on mortgage rates, but here too, the market widely expects the Fed to make this announcement tomorrow.  There are a few subtle options for the Fed to deliver the message in a way that helps or hurts rates, however.  Depending on which path the Fed chooses, rates could make bigger moves tomorrow, for better or worse.

Residential Building Continues to Dominate Construction Spending

Total construction spending continues to roar ahead of its 2021 pace, led again in March by another double-digit increase in the residential component. The U.S. Census Bureau says the investment in all types of construction was at a seasonally adjusted rate of $1.731 trillion in March, an 0.1 percent gain compared to February and up 11.7 percent year-over-year. So far in 2022, there has been a total of $376.337 billion spent, a 12.0 percent growth compared to the first three months of last year.

Spending in the private sector increased 0.2 percent from February to March at an annual rate of $1.380 trillion. The residential share of that spending rose 1.0 percent month-over-month compared to a gain of 0.7 percent in February. The annual rate in March was $88.045 billion, up 18.4 percent compared to March 2021. The non-residential component fell 1.2 percent from the prior month but is still 8.5 percent higher than in March 2021.

Na Zhao, an analyst for the National Association of Home Builders (NAHB) said the monthly growth in residential spending came from new single-family construction at $472.6 billion a 1.3 percent increase from February and 18.5 percent year over year while multifamily spending slipped 0.5 percent. Spending on home improvements also rose 1.1 percent for the month.

Zhao says NAHB's construction spending index illustrates the solid growth in single-family construction and home improvement from the second half of 2019 to February 2020, when the pandemic hit, and the quick rebound since July 2020. New multifamily construction spending has picked up the pace after a slowdown in the second half of 2019. However, he says home building is still facing supply chain issues, which means the industry is dealing with rising material costs as well as ongoing labor shortages.

Residential spending jumped by nearly $11 billion on a non-adjusted basis in March and year-to-date spending is up 18.8 percent from last year. The gains were again disproportionally in single-family building, up 19.8 percent during the first three months of 2022 while there has been only 5.0 percent growth in multifamily construction spending.

Public sector spending slowed 0.2 percent from February to an annual rate of $350.816 billion, a 1.7 percent annual increase. YTD spending is up 0.7 percent compared to 2021.

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We understand that no two paths to buying a home are the same. Whether you're a first-time homebuyer or a seasoned real estate mogul, we have a variety of products and loans designed specifically to meet your needs. We offer local underwriting and fast approvals to save you time and money. We have options for down payments and additional resources like our Finally Home! online program to help guide you through the home buying process. Contact one of our home loan specialists to discuss your options today!

 

April
19

Fed News from Our Partners at Idaho Central Credit Union

 

 

Fed Guidance Indicates Rapid Plans to Reduce Their Bond Portfolio

This week, investors awaited the latest Fed guidance. With last month's surprises from the Federal Reserve, Fed officials plan to reduce their bond portfolio more quickly than expected.

This news generated a negative impact for mortgage rates. Thus, mortgage rates rose to their highest levels since late 2018.

Fed Guidance Indicates Rapid Pace

To review, the Federal Reserve loosens monetary policy to boost the economy during periods of weakness such as after the start of the pandemic. By contrast, when the economy exceeds a certain capacity, the demand for goods and services becomes so strong that prices must rise to balance supply and demand, eventually forcing the Fed to tighten. The challenge is to implement the optimal level of tightening. This restrains economic growth just the right amount to bring down inflation without causing an undesirable recession (a soft landing).

Adjusting the federal funds rate and the size of the bond portfolio are the two primary tools used by the Fed to achieve its goals. Two weeks ago, the latest Fed guidance provided fairly precise insight on the projected pace of rate hikes. This week, they revealed their bond portfolio plans. In short, officials expressed more concern about upside risks to inflation than downside risks to economic growth.

Meeting Minutes Reveal Latest Fed Guidance

On Wednesday, March 16th's Federal Reserve meeting minutes indicated that the Fed plans to allow its holdings of Treasuries and mortgage-backed securities (MBS) to decrease by up to $95 billion per month. Overall, this reveals a faster than anticipated pace, likely beginning in May. The split comes down to $60 billion in Treasuries and $35 billion in MBS, phased in over three months.

For months, investors awaited this Fed guidance. While these quantities are quite large on a historical basis, they must be viewed in the context of nine trillion dollars of total bond holdings, double the levels held prior to the pandemic. Since mortgage rates are largely based on MBS prices, the reduced outlook for Fed demand for mortgage-backed securities. Conclusively, mortgage rates moved higher.

ISM Shows Expanding Service Sector

Aside from the Fed guidance, the most significant economic indicator released this week stemmed from the Institute of Supply Management (ISM). The latest data remained at a high level by historical standards. In fact, the national service sector index for March rose to 58.3.

Levels above 50 indicate that the sector is expanding. Readings above 60 are rare. Currently, investors watch to see how much consumer spending shifts from goods to services.

Looking Ahead After Most Recent Fed Guidance

After the most recent Fed guidance, investors look for additional Fed guidance on the pace of future rate hikes and balance sheet reduction. Also, investors continue to closely follow news on Ukraine.

Beyond that, the Consumer Price Index (CPI) released on Tuesday (4/12). Investors widely follow CPI because it looks at the price changes for a broad range of goods and services. Retail Sales come out on Thursday. Since consumer spending accounts for over two-thirds of U.S. economic activity, the retail sales data indicates growth.

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We understand that no two paths to buying a home are the same. Whether you're a first-time homebuyer or a seasoned real estate mogul, we have a variety of products and loans designed specifically to meet your needs. We offer local underwriting and fast approvals to save you time and money. We have options for down payments and additional resources like our Finally Home! online program to help guide you through the home buying process. Contact one of our home loan specialists to discuss your options today. Click on the image below to connect!

Disclaimer: All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information on this site was last updated 08/14/2022. The listing information on this page last changed on 08/14/2022. The data relating to real estate for sale on this website comes in part from the Internet Data Exchange program of INTERMOUNTAIN MLS (last updated Sun 08/14/2022 8:13:58 PM EST). Real estate listings held by brokerage firms other than Coldwell Banker Tomlinson may be marked with the Internet Data Exchange logo and detailed information about those properties will include the name of the listing broker(s) when required by the MLS. All rights reserved. --

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