This week: is short and sweet…the weekend’s #’MERICA celebration may or may not have something to do with it. ??
Market Snapshot
The 9-week surge in active inventory took a breather last week, driven by a jump in new pending sales and closed sales.
| June 25-July 1 | Prev 4 Week Avg. | % Change | June 18-24 | |
|---|---|---|---|---|
| New Listings | 797 | 802 | -0.56% | 797 |
| New Pending Sales | 926 | 871 | 6.35% | 830 |
| New Sales | 871 | 668 | 30.44% | 632 |
| Active Inventory | 3,219 | 3,186 | 1.05% | 3,277 |
| 30 Year Fixed Mortgage | 2.98% | 2.98% | unchanged | 3.02% |
While rates ticked below 3% last week, it was only slightly. They’ve been trading in this very narrow range around 3% for 12 weeks now.
The big June jobs report was released after FRED reports the weekly mortgage rate we use. That report came in better than expected with the economy adding 850k jobs (150k over expectations) and wage growth beating inflation growth.
As expected, when the news dropped, mortgage rates jumped higher quickly (better than expected news for the economy usually means bad news for mortgage rates).
Unexpectedly, that was short-lived, and rates came right back down.
Why? I’ll try my best not to confuse and bore you…
Like most markets, bonds usually trade in ranges between a high point of resistance and low point resistance dictated by what the major bond buyers believe the future is headed based on the information they have.
This creates a trading range (prices bounce around that range) that holds until some “news” comes out that is strong enough in either direction to convince investors they should change their perspective.
While the jobs report came in above expectations, investors didn’t feel it was strong enough to convince the Fed to change any policy decisions any time soon, and those policy decisions are the biggest influencers over mortgage rates right now.
In fact, analysts are expecting this range to hold through the summer.
On the San Diego front, we have an update on local building efforts.
San Diego homebuilders had one of their most productive quarters in years, with nearly 3,000 new homes constructed, but housing experts say it still doesn’t come close to what is needed.
A new estimate by Borre Winkel, CEO of San Diego’s Building Industry Association shows San Diego needs 20,000 – 25,000 new housing units a year just to keep up with population increases.
We’re building half that…and that’s on a good year.
Without significant changes on the policy side of things, there’s literally no shot for builders to make a dent in the housing supply situation in San Diego.
In The News
- Lumber prices down more than 40% from their peak.
- What the 10-year Treasury rate’s dip below 1.5% may be saying about inflation.
- Homebuyers are getting sick of the housing boom.
