For the third week in a row, mortgage rates moved lower. Freddie Mac's 30-year fixed average landed at 6.23%, down from 6.30% and well under the 6.81% of a year ago, while the 15-year fixed slipped to 5.58%. Freddie Mac's Sam Khater noted that rates now sit at their lowest level of the last three spring homebuying seasons, and that purchase applications, refinances and pending sales are all picking up. From where we sit in Richfield, that matches what we are seeing on the ground.
Pending Sales Point the Right Way
The National Association of Realtors reported Tuesday that pending home sales rose 1.5% in March, beating expectations and following an upwardly revised 2.5% gain in February. Contract signings were still down 1.1% from a year earlier, but the monthly gains came despite rates averaging about 6.5% during March. NAR's Lawrence Yun called it a sign of pent-up demand. Since pending sales lead closings by a month or two, this suggests the spring numbers will look better than the soft March closings we discussed last week.
Consumers are spending, too. March retail sales jumped 1.7% from February and 4% from a year earlier, a stronger print than economists expected, though a good portion of that reflects higher fuel prices rather than more shopping trips.
Ceasefire Extended, Oil Still Jumpy
On Wednesday, President Trump extended the U.S.-Iran ceasefire indefinitely to allow peace talks to continue, and stocks kept climbing. The S&P 500 is now on track for its best month since 2020 after recovering the entire first-quarter loss in a matter of weeks. Oil, however, refused to settle down. Continued friction in the Strait of Hormuz and the resignation of Iran's lead negotiator sent Brent crude back above $105 on Thursday, with U.S. crude near $96. That is a reminder that the energy situation, and by extension the inflation outlook, remains unresolved.
The reason rates have fallen anyway is that bond investors are looking through the day-to-day oil swings and focusing on the trend in core inflation, which has been tame. As long as that holds, mortgage rates have room to stay in the low 6s.
The Fed Meets This Week
The Federal Open Market Committee gathers Tuesday and Wednesday for what is widely expected to be Chair Jerome Powell's final meeting at the helm, with Kevin Warsh's nomination working through the Senate. The overwhelming expectation is that the Fed holds its benchmark rate at 3.50%-3.75% for a third straight meeting. The interesting part will be the statement and press conference: whether policymakers acknowledge the war's uncertainty, how they characterize energy-driven inflation, and whether any members dissent in favor of a cut. We will also get first-quarter GDP, the March PCE inflation report and the delayed March housing starts data the same week, so expect some volatility in rates.
What This Means for Central Utah
A 6.23% rate on a $340,000 Sevier County home, roughly where our local median has been running this year, means a principal-and-interest payment that is noticeably lighter than it was a month ago at 6.5%. On a typical loan that is around $60 a month in savings, or more than $700 a year. For a buyer using a USDA zero-down loan in Salina, Monroe, Ephraim or Nephi, the difference can be the deciding factor in qualifying.
Our advice to buyers this week: get fully pre-approved now, before the Fed meeting and the data dump, so you can lock quickly if rates dip further or protect yourself if they bounce. Our advice to sellers: the combination of falling rates and rising pending sales means the buyer pool is growing as we head into May. Homes that are priced correctly and show well are moving; homes priced for 2022 are sitting. If you have been thinking about listing this summer, getting on the market before Memorial Day puts you in front of the most motivated Central Utah buyers of the year.