Market Update: Rates Rise Once Again; Big Housing News Coming Up This Week

Blog posted On August 21, 2023

Mortgage rates inched past 20-year highs last week, leaving many people scratching their heads. Isn’t inflation supposed to be the big factor driving rates? And if inflation is calming down, why are rates rising? Both good questions that we’ll dive into below.

Inflation no longer the main rate factor?

For the past year, rates have been hyper focused on inflation levels. Hotter inflation has been a key reason for higher rate trends. But recent indicators have shown that inflation is continuing to cool while rates are continuing to climb. So, what’s the deal? Like most rate swing causes, there’s no singular reason that we can blame. However, the Federal Reserve did mention one thing of note in the ‘minutes’ from July’s meeting.

Fed’s ‘minutes’ put the spotlight on a new star

Inflation’s limelight has faded. While it’s still important, it no longer is the apple of experts’ eyes. The new star? Weak economic data – specifically jobs data. “We're no longer just waiting for inflation to fall back to target levels, but also for economic data to take a turn for the worse,” notes Matthew Graham of Mortgage News Daily. The Fed’s minutes specifically mention wanting to see the supply and demand levels balance out in the jobs market, which basically means they want to see lower numbers in the jobs reports. The weaker the economic data, the better the rate trends. 

Housing news coming up this week…

  • Tues: Existing home sales (July)
  • Weds: New home sales (July)

Let us know if you have any questions or concerns about the market and rates!


Sources: Bloomberg, MBS Highway, Mortgage News Daily