Wednesday's Scoop: Snooze🌤️

Hey friend - we’re closing in on the last few days of June. Brace yourselves.

Here’s what you need to know today to inform your work, spending, and investments:

1. Mortgage rates are still pretty high.

2. Low home affordability has slowed new home purchases.

3. Extreme weather threatens crop yields this year and risks more food inflation.

Inflation Rate: +3.3% (YoY), +0% (MoM)
^{Policymakers aim for 2% YoY inflation. (May CPI)}

Extreme weather is threatening global crop yields, potentially risking high food prices. Drought in the Black Sea region and heavy rains in the US are among the most significant concerns. According to Maxar meteorologist Chris Hyde, below-normal rains in July and August could impact corn and sunflower crops in the Black Sea area, one of the world’s biggest exporters. Global wheat prices already hit a 10-month high in May due to adverse weather reducing yields in Russia. Meanwhile, excessive rain in the US Midwest raises fears of flooding, affecting corn and soybean fields. Record temperatures have delayed planting and hurt crops across major growing regions. Grocery prices have finally stabilized in recent months after years of inflation. Anything affecting food prices could stress families further.

30yr Mortgage Rate: 6.9%
^{That’s up from 6.8% a year ago. (MBA)}
Median Home Price: $419,300
^{That’s up from $397K a year ago. (Existing homes - NAR)}

Mortgage costs remain high. The Mortgage Bankers Association reported that the average 30-year fixed-rate mortgage stayed flat last week at 6.9%, nearly double what a mortgage cost at the beginning of 2022. Mortgage applications also stalled. The number of applications to buy a new home increased slightly but remained 13% below the same week a year ago. In recent months, reports on the housing market have indicated a stagnant market with a shortage of affordable homes. Existing homeowners have avoided selling their homes due to old age trends or a desire to hang on to their cheaper existing mortgage rate. New home construction has slowed, perpetuating the shortage and keeping prices high.

Low home affordability has slowed new home purchases. The Census Bureau reported that sales of newly constructed homes dropped 11.3% in May, the slowest pace of sales since November. Near-record prices and high mortgage costs continue to drag down affordability, though the median sale price of a brand-new home decreased slightly in May to $417,400.

The Market: ⬆️ +0.2%
S&P 500: 5,477.90
1Mo: +3% | 1Yr: +27% | 5Yr: +86%

The market didn't move much on Wednesday, with little news shaking the existing narrative of slow but steady business activity and cooling inflation. A report from food giant General Mills confirmed these trends of slowing sales and discounted prices.