Buyers gotta buy
Pending sales (signed contracts to purchase an existing home) rose 3.4% month-over-month in March 2024 [Source: NAR]. This despite average 30-yr mortgage rates hovering around 7% and record home prices in many areas. A larger number of homes for sale certainly helped (up roughly 20% year-over-year), but the real story is pent-up demand. Life happens, and when it's time to move, it's time to move.
Slowing economy, rising prices?
Real GDP grew at an annualized pace of 1.6% in Q1 2024, well below both Street expectations (2.5%) and the previous quarter's growth (Q4 2023: 3.4%). A cooling economy should have been positive for the bond market, but instead bond prices got crushed, sending bond yields and mortgage rates higher. Why? Q1 2024 inflation - as measured by Private Consumption Expenditures - appeared to reaccelerate [Source: BEA]
So here we are again
We will find out today (Friday), if the "sneak peek" at the PCE inflation data for March was accurate. With 10-year US Treasury bond yields having jumped nearly 1% in the last four months (to over 4.7%), it would not take much good news to cause a bond price rally. Expectations are for March "core" PCE to improve slightly, from +2.8% YoY in Feb --> +2.7% YoY in Mar.
