Mortgage Rates Fall to a 3-month Low as the Fed Does a Historic Monetary Policy Reversal
You can track the Twin Cities housing market data here. You can track mortgage rates here. You can track homebuilder confidence here.
Mortgage Rates: Mortgage rates nationwide have retraced from 4.95% in mid-November, back down to a 3-month low as I record this of 4.63% for a 30-year fixed, conventional mortgage.
In his most recent speech, Fed Chairman Powell appeared more dovish with language that could be an indication of a slow-down in the Fed’s plans to normalize interest rates. They are meeting today, the 18th and tomorrow, the 19th, and the minutes from those meetings will provide us with further insight into what they claim their plans will be. Those minutes will likely be released before this video is published.
From my perspective, by keeping interest rates at zero for 8 years and by massively increasing their balance sheet during that time, the Fed has created an economic environment that has them holding a double-edged sword. Additional rate hikes and liquidations are likely to continue to be very bearish for equity markets but a premature ending of the tightening cycle is likely to be very bearish for the U.S. dollar and could also be bearish for equity markets as the Fed would essentially have to admit that the U.S. economy is not as healthy as they had previously thought.
Update on 12/20/18: The Fed did move forward with another rate hike on Wednesday and despite some dovish talk about reducing the number of rate hikes in 2019, they claimed to remain committed to shrinking their balance sheet by continuing to liquidate treasury bonds which sent stocks crashing and is likely to continue to put upward pressure on long term interest rates into the foreseeable future.
Home Builder Confidence: In December, the nationwide home builder confidence index fell another 6% to a 3 ½ year low of 56.
Closed Sales: Closed sales in the Twin Cities fell 12% in November to 4,653 closings. That was an expected decline for this time of year and closed sales are flat year over year.
New Listings: New listings fell 34% in November with 3,994 homes hitting the market. A decline that was expected month over month but new listings are notably up 13% year over year.
Homes for Sale: The home inventory level fell 15% in November leaving 10,268 homes for sale. That monthly decline was also expected but homes for sale are notably up 14% year over year.
The Median Home Price: The median home price in the Twin Cities remained flat at $265,000 which is pretty much in line with the cyclical trend.
Pending Sales: Pending sales fell 20% in November with 3,879 homes coming under contract. A monthly decline like that was expected but pending sales are notably down 4% year over year.
This concludes my insight for December. Please don’t hesitate to connect with me if you would like to discuss the market conditions in your particular neighborhood and I thank you for taking the time to watch this video.
In his most recent speech, Fed Chairman Powell appeared more dovish with language that could be an indication of a slow-down in the Fed’s plans to normalize interest rates. They are meeting today, the 18th and tomorrow, the 19th, and the minutes from those meetings will provide us with further insight into what they claim their plans will be. Those minutes will likely be released before this video is published.
From my perspective, by keeping interest rates at zero for 8 years and by massively increasing their balance sheet during that time, the Fed has created an economic environment that has them holding a double-edged sword. Additional rate hikes and liquidations are likely to continue to be very bearish for equity markets but a premature ending of the tightening cycle is likely to be very bearish for the U.S. dollar and could also be bearish for equity markets as the Fed would essentially have to admit that the U.S. economy is not as healthy as they had previously thought.
Update on 12/20/18: The Fed did move forward with another rate hike on Wednesday and despite some dovish talk about reducing the number of rate hikes in 2019, they claimed to remain committed to shrinking their balance sheet by continuing to liquidate treasury bonds which sent stocks crashing and is likely to continue to put upward pressure on long term interest rates into the foreseeable future.
Home Builder Confidence: In December, the nationwide home builder confidence index fell another 6% to a 3 ½ year low of 56.
Closed Sales: Closed sales in the Twin Cities fell 12% in November to 4,653 closings. That was an expected decline for this time of year and closed sales are flat year over year.
New Listings: New listings fell 34% in November with 3,994 homes hitting the market. A decline that was expected month over month but new listings are notably up 13% year over year.
Homes for Sale: The home inventory level fell 15% in November leaving 10,268 homes for sale. That monthly decline was also expected but homes for sale are notably up 14% year over year.
The Median Home Price: The median home price in the Twin Cities remained flat at $265,000 which is pretty much in line with the cyclical trend.
Pending Sales: Pending sales fell 20% in November with 3,879 homes coming under contract. A monthly decline like that was expected but pending sales are notably down 4% year over year.
This concludes my insight for December. Please don’t hesitate to connect with me if you would like to discuss the market conditions in your particular neighborhood and I thank you for taking the time to watch this video.
