Mortgage rates

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The core personal consumption expenditures price index, which strips out food and energy, increased 0.1% from the prior month, the smallest in six months.

But economists seem to differ on what the latest movement in mortgage rates means for the summer home sales business.

Cook expects three- and six-month inflation rates to continue to move lower on a "bumpy path," with monthly data similar to the "favorable" readings seen in the second half of 2023 for the rest of the year.

Potentially limiting the Federal Reserve's ability to cut rates is the growing view that the economy's so-called neutral rate — a theoretical level of borrowing costs that neither stimulates nor slows growth — is much higher than policymakers are currently projecting. 

The increase in total home sales will be slower than prior projections and that should lead to less growth in purchase originations, Fannie Mae's June forecast said.

The decline for the third consecutive week reflects investors' belief that the Federal Open Market Committee is likely to cut rates this year.

Markets appeared to welcome signs of future rate relief, with the latest Freddie Mac average falling for the fifth time in six weeks.

The Federal Reserve held firm on its current interest rate levels after its latest meeting, but inflation numbers are leading to talk of potential action in third and fourth quarters.

Observers say the stronger-than-expected Bureau of Labor Statistics employment data could leave the Fed pondering when, or even if, to cut short-term rates this year.

Still, the expected year-over-year pace of home price increases in 2024 is faster than what the first quarter Fannie Mae Home Price Expectations survey has predicted.

The 30-year fixed-rate mortgage average dropped back below the 7% level as investors reacted positively to news the economy is slowing, Freddie Mac said.

The company foresees a dampened mortgage originations market through 2026, as last year's trends continue to have an impact on housing.

Yields on the benchmark 10-year Treasury also rose in the past week as bond and note auctions got tepid responses from investors.

The 10-year Treasury yield, one of the mechanisms used to price 30-year fixed rate mortgages, is higher than where it was one week ago.

BofA is betting the Federal Reserve will make only one cut to the federal funds rate by the end of this year. MBA says originators are in for a $1.6 to $1.8 trillion year.

Millennials are likely to drive purchase business, while Gen X is the most likely refinance candidates, a related Freddie Mac analysis said.

For the second consecutive week, rates for the 30-year fixed rate mortgage declined as the Consumer Price Index report was better than expected.

For the first time since the Federal Reserve started raising short-term rates two years ago, the number of home purchase mortgages locked rose on an annual basis, Optimal Blue found.

The 30-year fixed rate mortgage fell for the first time in six weeks as the Federal Open Market Committee meeting outcome is finally priced in.