Market Snapshot

To the chagrin of every single prospective homebuyer in San Diego, we somehow managed to see a decline in the already minuscule number of available homes for sale last week.

 Jan. 21-27Prev 4 Week Avg.% ChangeJan. 14-20
New Listings54642129.61%518
New Pending Sales68046047.75%620
New Sales402412-2.37%370
Active Inventory1,7051,6433.81%1,734
30 Year Fixed Mortgage3.55%3.34%6.45%3.56%

That’s definitely not normal for this time of year.

As long as new pending sales outpace new listings, you can expect this market to remain in the “🔥 x 1,000” territory.

As you know by now, mortgage rates are on a rapid rise. The average 30-year fixed rate climbed 0.5% in January. As expected (in last week’s Real Report), rates took a break 🙏 and are holding steady now for almost two weeks.

The Fed’s shift in policy is the main culprit for the rise. The other is inflation.

There will be some fear in the coming weeks tied to the Fed raising the benchmark rate in March and what that means for future mortgage rates.

Here’s my take on that – this rate increase by the Fed is not unexpected, and thus mortgage bond investors have already priced that into the current mortgage rate environment. In other words, that increase in March will not directly cause any mortgage rate changes.

Changes in inflation expectations, however, definitely will impact mortgage rates, and there is actually some silver-lining in the data on that front.

While inflation is increasing still, there are some signs it may be slowing.

Producer inflation leveled off and actually took a small step back last month. That should be a reflection of the future for consumer inflation assuming no other cogs in the economic wheel.

Producer inflation usually precedes consumer inflation. In the chart below, the producer inflation started rising a good 2 months before we started to feel it on the consumer side of things.

The theory (or possibly more like hope) is that we should see consumer inflation start to level off in a couple of months.

In The News
The Week Ahead
  • The monthly jobs reports drops on Friday and no one is quite sure what to expect due to the recent and massive wave of Omicron. These jobs reports usually are pretty impactful on mortgage rates but this one may be less so since it will likely have an ” * ” next it in the eyes of big Wall Street investors.