The housing market is feeling the squeeze from higher interest rates.
The average 30-year fixed mortgage rate jumped 23 basis points from last week to 6.62 percent, the highest rate since November 2022, according to the Mortgage Bankers Association (MBA). This is leading to a drop-off in mortgage applications at a time when home buying is usually picking up.
"The jump led to the purchase applications index decreasing 18 percent to its lowest level since 1995,” according to Joel Kan, MBA vice president and deputy chief economist. “This time of the year is typically when purchase activity ramps up, but over the past two weeks, rates have increased significantly as financial markets digest data on inflation cooling at a slower pace than expected."
Mortgage rates rose rapidly in 2022 as the Federal Reserve increased its benchmark interest rate with the goal of bringing down inflation across the economy, including the overheated housing market. On that front, the economy has made some progress.
The National Association of Realtors on Tuesday reported that the median existing home price ticked up 1.3 percent in January from the year before, which is the smallest gain since 2012. The slowing inflation tracked with a 0.7 percent drop in existing home sales, which is the biggest drop since 2010.
“Home sales are bottoming out,” said NAR Chief Economist Lawrence Yun in a press release. “Prices vary depending on a market’s affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines.”
There was some moderation in mortgage rates in recent months, as the market anticipated the Fed easing up on rate hikes. However, a slew of recent data reports showing a surprisingly strong U.S. economy have tempered hopes of fewer rate hikes.
The whole point of raising rates, according to Fed officials, is to bring down inflation. For now, though, the combination of higher rates and still historically high prices is pushing many homebuyers out of the market.
"The increase in mortgage rates has put many homebuyers back on the sidelines once again, especially first-time homebuyers who are most sensitive to affordability challenges and the impact of higher rates," said Kan.
Facebook parent Meta officially has changed it’s ticker symbol from ‘FB’ to ‘META’. Paul Meeks, a portfolio manager, Independent Solutions Wealth Management, and a professor of practice in the Baker School of Business at The Citadel, joined Cheddar News to discuss why the tech giant has had to make big changes to its name, its ticker, and its business plans. "When you see what's happening in digital advertising — and there was a slowdown there even before the threat of a recession, which could cause a even more drastic slowdown next year — they had to pivot," he said. Meeks noted he sees Facebook dominating in the metaverse space going forward — whatever that may end up being.
Sports merchandising company Fanatics announced it will be making trading cards featuring college athletes, a deal made possible by the NCAA's change to NIL rules for its players. Anchors Kristen Scholer and Ken Buffa break down the deal for Cheddar.
Catching you up on today’s top business headlines with household wealth falling in Q1 for the first time in two years, Meta officially changing its ticker symbol from ‘FB’ to ‘META’, and updates on Tesla.
The European Union has approved a 40 percent quota for women to sit on company boards. This comes as only 9 of the 27 EU member states have gender equality legislation.
Amanda Victoria, co-founder and CEO of Siponey, joins Cheddar News to talk about the company's canned cocktails. The spritz is made with only four ingredients — wildflower honey, aged rye whiskey, sparkling water, and fresh lemon juice.
Officials and power operators are bracing the public for blackouts caused by higher-than-average temperatures this summer. Utility officials in California and Arizona are warning of potential interruptions this summer due to the strain on energy supplies. Heat waves and drought conditions weaken power grids and available electricity reserves. This also makes hydroelectric power less reliable and raises the risk of wildfires.
Cisco DeVries, CEO of OhmConnect, joins Cheddar News to discuss.
The markets opened lower on Thursday as investors hold their breath ahead of the May consumer price index, which will give investors a better picture of the state of inflation in the United States. Michele Schneider, a partner and the director of trading research and education for MarketGauge.com, joined Cheddar to discuss. "If the CPI read is softer than what's expected, we actually might get a rally," she said. "If it's more than expected, then I think it will spook the market."
