Why are mortgage rates increasing

In partnership with

New here? Join the newsletter (it's free).

Inflation ticks up after easing for six consecutive months link

• The annual inflation rate rose to 2.6% in October, up from 2.4% in September, after six months of decline. This matches economists' predictions and reflects lingering pressures despite cooling from the 9.1% peak in June 2022.

• Core inflation remained steady at 3.3% year-over-year, driven by shelter costs, which rose 4.9%—their slowest increase in over two years. Excluding shelter, consumer prices increased only 1.3%, indicating less broad-based inflation.

• The Federal Reserve's inflation target is 2%, and recent trends show progress, but the shelter index's lag complicates timely adjustments. Inflation averaged 1.6% annually pre-pandemic (2015-2019), underscoring current progress relative to historical highs.

Existing home sales post the biggest increase in nearly three years link

• Existing home sales increased 1.6% in October, reaching an annual rate of 4,179,346, the highest since January 2022. This marked the first year-over-year gain in sales (1.7%) since late 2021, driven by buyers capitalizing on September's dip in mortgage rates.

• The median home price jumped 5.2% year-over-year to $435,313, the largest increase in six months. Homes took an average of 41 days to sell, the slowest pace for October since 2019.

• Metro trends varied widely: prices rose sharply in Milwaukee (13.6%) and Fort Lauderdale (13.3%), but dropped in Austin (-3.4%). Pending sales surged in San Jose (32.1%) but fell steeply in Tampa (-24.5%).

Why are mortgage rates increasing when the Federal Reserve is cutting rates? link

• Mortgage rates are influenced by the 10-year Treasury bond, which reflects inflation and economic conditions. Upward revisions in economic data and strong job numbers have pushed the 10-year Treasury yield higher, driving mortgage rates up despite the Fed's rate cuts.

• The 25-basis point increase in mortgage rates during October 2024 reduced house-buying power by over $10,000. This rate hike has stalled progress in easing the "rate lock-in" effect, limiting housing market activity.

• Existing-home sales rose 0.4% from September to October but are 3.7% lower compared to last year. Projections suggest only a modest recovery in sales as mortgage rates gradually ease through 2025.

Office visits reach highest level since 2020 link

• New York and Miami are leading the office recovery, with office visits at 86.2% and 82.6% of pre-pandemic levels. Nationwide, visits are still 34% below October 2019 but have reached their highest point since February 2020.

• Cities like Washington D.C., Boston, and Atlanta saw significant year-over-year growth in office visits, with increases of 16.4%, 15.6%, and 13.8%, respectively. Federal agency pushes in D.C. and stricter RTO mandates by companies in Atlanta are driving these gains.

• October 2024 was the busiest month for in-office visits since the pandemic in several cities, including Atlanta, Dallas, and Houston. Houston rebounded strongly after summer storms, reclaiming a position just under the national baseline.

The average retail lease term rose to 96 months in 2024 link

• The average retail lease term rose to 96 months in 2024, up from 90 months in 2023, driven by low supply and shifting consumer demands. Smaller spaces (1,000-4,999 sq. ft.) saw the most growth, with average lease terms climbing from 84 months in 2023 to 95 months in 2024.

• Power center leases averaged 100 months in 2024, bolstered by grocery-anchored setups that generate high foot traffic. Neighborhood, community, and strip centers saw terms rise from 83 months to 92 months as they serve dual purposes for shopping and last-mile logistics.

• Cities like Tampa, Nashville, and Charlotte experienced the biggest lease term increases, reflecting population growth and urban revitalization. The Inland Empire and Detroit also saw growth as retailers adapt to local economic shifts and affordability trends.

Apartment demand in this small Utah market is surging link

• Provo-Orem’s population growth is robust, with its young adult demographic (20-34 years old) growing 5.4% between 2021 and 2022, the second-fastest rate among U.S. apartment markets. This age group makes up 27.4% of the population, far exceeding the U.S. average of 20.4%.

• The apartment supply in Provo-Orem grew 6.4% in the past year, over double the national average of 2.8%. Despite rent cuts averaging 2% over the last year, occupancy hit 94.8%, aligning with national norms and reversing prior declines.

• Job growth in Provo is steady, with a forecasted 1.8% increase in 2025, driven by tech, education, and healthcare sectors. Major employers like Utah Valley University and companies such as Adobe and Oracle bolster the market’s appeal.

Build-to-Rent manufactured home community trends 

What Home Depot’s earnings mean for the future of the housing market

Foreclosure rates for all 50 states in October 2024

Why so many young adults are still living with their parents. Here’s what’s behind the trend

Here’s where economists think the housing market is headed

List of Proptech Startups That Just Got Funded

Mapped: Retirement-Age Workers by U.S. State

The Bigfoot house

Link to the listing

That's all folks. Let me know what you think of the email. Quite a lot went into it. If these emails aren't for you anymore, you can unsubscribe here.

Cheers,

Vidit

Instagram

P.S - Read past newsletters here