Wednesday's Scoop: Drifting🌤️

Hey friend - here’s what you need to know today to inform your work, spending, and investments…

1. Rising mortgage rates keep deterring buyers.

2. Home prices keep climbing, but less quickly.

3. Policymakers think the economy is still strong but slowing.

Inflation Rate: +3.4% (YoY), +0.3% (MoM)
^{Policymakers aim for 2% YoY inflation. (April CPI)}

Policymakers think the economy is doing fine but not great. The Federal Reserve's bi-quarterly Beige Book report indicated that living costs aren’t rising as quickly anymore, consumer spending is losing some willpower, and hiring has slowed. Across the country, most regions reported slight or modest growth in business activity, while some reported no growth. Americans continue to cut back their spending, sensitive to rising prices. However, travel and tourism spending is still strong. People are much more selective with their budget.

30yr Mortgage Rate: 7.1%
^{That’s up from 6.9% a year ago. (MBA)}
Median Home Price: $407,600
^{That’s up from $386K a year ago. (Existing homes - NAR)}

Mortgage costs keep climbing and deterring homebuyers. The Mortgage Bankers Association reported the number of mortgage filings to purchase a new home fell 1% last week, down 10% from a year ago, as the average 30-year fixed-rate mortgage increased to 7.05%. The Federal Reserve’s efforts to slow inflation have driven borrowing costs to the highest level in decades. The average mortgage costs nearly double what it did just a few years ago.

Home prices keep climbing but at a slower pace. The Federal Housing Finance Agency said US home prices rose only 0.1% in March after climbing 1.2% in February. A shortage of homes on the market remains the main culprit behind rising home prices. New home construction has picked up over the past year but accounts for less than a fifth of the overall market. Existing homeowners have resisted selling due to the high cost of a new mortgage, keeping the resale supply low. Most people locked in low rates a few years ago and want to hang on to their cheaper monthly payments.

The Market: ⬇️ -0.7%
S&P 500: 5,266.95
1Mo: +3% | 1Yr: +25% | 5Yr: +91%

The market wavered lower today as investors worried more about the economy's path forward. There's waning optimism that policymakers will reduce borrowing costs anytime soon, which could lead to a slow economy with above-average inflation and high interest rates.