Monday Mortgage Minute – Homebuilder Sentiment is up. BUYERS ARE BACK BABY!!!

Last week was mostly a dud when it came to news except a few surprises. #1 National Home Builder Sentiment and #2 Core retail sales and retail sales

First National Home builder sentiment came in at 50 which marks it’s fifth month in a row of increase. Yup it’s been on the rise for the past 5 months. On one hand this is great news as this reading of 50 is back to Neutral on a scale of 0 – 100. On the other hand…it’s still 50 and spent way too long in the trenches of the 30s and 40s while mortgage rates got clobbered in the fall and end of 2023. Builders are finally seeing that demand has returned as buyers and real estate professionals have all come to the conclusion in lock step, that the state of the market is the state of the market, and if you want to get in a home still…you better get out there and start looking! The only thing that could make this EVEN better is for next months reading to be above 50, even if it’s just by a little bit.

As for Core retail sales and retail sales – they are starting to show cracks as the US consumer pulls back on spending in a lot of categories that economists and analysts watch. This is also happening across ALL economic levels, yes, even among the upper income earning households, spending is being curbed.

This is interesting because the Buyer resurgence in mortgage applications, open escrows of existing home sales, and new builds, suggests there is fuel in the tank when it comes to the appetite for homes. And that makes sense because we make conditional exceptions for basic human needs like food clothing and shelter. The real story here will be discretionary spending across industry and economic status. That’s really the ember people have their eyes on as it’s typically a leading indicator of overall economic trajectory when the sense of headwinds become more palpable.

So what does that mean for mortgage rates Andy?

Mortgage rates will continue to march sideways like they have for weeks. It’s become customary for rates to move up and down in a tight 0.25% price range when there’s no major macro direction to attach to. Expect that to be the same this week. We are also tipping into the window where all eyes and ears begin to turn towards the upcoming fed meeting Wednesday June 14th. The markets are all grasping for any hints it can latch onto prior to the rate release and press conference. You will also begin seeing more predictions on whether there will be an additional rate hike, rate pause, change of tone, and descriptions of how the fed members are feeling about their policies.

Here’s a quick look at what we’re watching in the markets this week:

Tuesday: We get Flash Manufacturing PMI and Services PMI & New Home Sales

Wednesday: Federal Reserve meeting minutes will come out (there should be NO surprises here, but if there are…watch out!)

Thursday: We get Preliminary GDP – which has been a crap shoot as of late and also unemployment comes out. There is a bit of controversy around this little GDP topic because there’s a mostly unknown trend of reporting GREAT numbers on the day they’re supposed to be released and then quietly issuing the revisions afterwards when almost no one’s looking….oh, and the revisions are terrible by the way, they’ve been way worse than initially reported, but don’t get made at me for reading numbers on a report, they’re the ones fudging the figures.

Friday: Core PCE (The feds favorite measurement of inflation), Personal income and personal spending…all of which kind of mix together and paint a picture of how the consumer is doing when it comes to income vs. spending. If anything has a chance at stirring up optimism or dashing peoples hopes this week, Friday will be the day.

And that’s it for this episode. Let us know how we can help you win in mortgage and real estate!

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