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January 24, 2023

The Breakdown:

Increased Housing Inventory Ahead?

Inventory of existing homes remains tight, with more than half of homes on the market selling in under a month. Many would-be homebuyers have given up for now, with hopes of resuming their search later in 2023 with lower rates and more inventory.

If we see inflation continue to decrease, it is likely that the lowering mortgage rates will drive inventory but there is still a common misconception floating around regarding home prices. We’ve explained why our current economic situation is different from the Housing Bubble in the past, and new data continues to be supportive of home prices. That’s great news for current and prospective homeowners alike!

In addition to existing home inventory increasing, there is a good chance we’ll see an increase in new constructions as well. While the numbers for December we’re by no means impressive, they did show a slowing in the pace of decline. On top of that, the National Association of Home Builders released its Housing Market Index which captures the builder sentiment and provides a snapshot of what to expect in new construction. The NAHB Index showed positive improvement for the first time in a year! The Chairman of the NAHB, Jerry Konter, stated that “cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023.”

Coming in much cooler than expected, Producer Price Index (PPI) added to the relief from last week’s reports. Headline PPI is now about half of when it reached its peak last March and Core PPI, which strips out volatile food and energy costs, decreased annually as well. In addition to bringing the cost of goods down, the cooling of mortgage interest rates is on the mind of many.

With this trend likely to continue, some are questioning if now is the right time to buy. For the average homebuyer, the answer to that question is yes. While most homes are moving quickly and the ones that don’t are often overpriced, there are tools and tips to ensure that borrowers are not drastically overpaying for a home. When interest rates do come down, refinancing will be an option. The reason we don’t recommend waiting is that lower interest rates will open up a different level of competition and in the meantime, home prices will continue to appreciate.

This week, market news will be dominated by the first reading of 2022’s fourth-quarter GDP and the Fed’s preferred measure of inflation, Personal Consumption Expenditures. In addition, we’ll also be receiving some more housing data from December. Stay tuned for next week’s breakdown!

Loan Shield - Protecting Our Borrowers

We're now offering a Loan Shield through one of our preferred lenders, UWM. This means that UWM will retain servicing the loan for a minimum of 5 years, giving our borrowers some awesome benefits!

  • UWM’s elite client service
  • Protection from unwanted solicitations from other lenders
  • ACH auto-pay to set and forget
  • An appraisal credit of up to $600 if refinancing within 5 years
  • Access to UWM’s TRAC (Title Review and Closing) process when eligible for continued savings when refinancing within 5 years