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Welcome to April for those who celebrate and happy Q2!

If you have found anything in our previous issues helpful, would you be willing to forward it to someone you know? Your support means the world to me.

Here’s what we’ve got for you today:

1. Q1 Recap - 3 Takeaways in 3 Min ⏱️

2. Pending Home Sales Index for Feb Stronger Than Expected 🔥

3. Core PCE Report Continues to Lag 📝

By the way, this article on my favorite email tool is the most clicked link in this newsletter, you should check it out if you are interested.

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Nuwave Rates Today 📉

Q1 Recap - 3 Takeaways in 3 Min ⏱️

Q1 was quite a wild ride. Thank you for being a part of it with us.

Here are 3 main takeaways in 3 minutes:

1. Mortgage rates were extremely volatile

2. SVB collapses along with faith in banks

3. FED alters their course

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Mortgage Rate Report Card

To say Q1 was a rollercoaster is quite an understatement. Here is a quick look at our Mortgage Rate Recap:

• Rates started the quarter at 6.25%

• Rates reached a high of 7.125% (2/24)

• Rates reached a low of 5.875% (2/1)

• Today they are at 6.25%

Wait…what?

Yes. Rates went from their low point to their high point in less than 30 days.

Payment shock, frustration, and unmet expectations plagued buyers throughout the quarter.

However, those buyers that persevered and trusted their team (both agent & lender) came out with massive seller credits and the home they wanted.

Did we mention no one trusts banks anymore?

Q1 ended this year with SVB collapsing on March 10th, followed by several other banks across the US and Europe.

This rocked both the financial world and the FED.

For more details on how this happened, and how this affects you, read our previous edition: SVB Impact on Real Estate Market

FED Reevaluates Position

In the final FED meeting of the quarter, Jerome Powell announced that with the final rate hike of 25bps, the FED would be reevaluating the need for additional rate hikes moving forward.

The sentiment from many analysts and market experts is that the FED will not raise rates throughout Q2.

Instead, as JPow said numerous times in the meeting, the FED would use tightened regulation and lending standards in banks to fight against inflation without continuing to raise rates.

If this holds true, we should continue to see rates stabilize around this 6.5% mark and, potentially, begin to fall moving into the summer buying season.

Pending Home Sales Index for Feb Stronger Than Expected 🔥

This index (released Friday) is a forward-looking indicator of home sales based on contract signings in February.

As a reminder - Pending Home Sales were up +8% in Jan.

February was up +.8% (while expectations were that it would be down -3%).

The gain in pending home sales is remarkable considering rates rose to over 7% throughout the month.

This marks the third consecutive month of increases in pending home sales.

Once again, as we detailed in our previous edition, buyer demand is out there.

As rates stabilize, and hopefully fall, throughout 2023, we should continue to see strong housing numbers.

There is nothing in the data that indicates home prices will plummet at this point. Inventory remains low and buyer demand is brewing.

Core PCE Report Continues to Lag 📝

The FEDs preferred gauge of inflation - PCE - was released on Friday.

It was expected to remain at 4.7% but instead came in lower at 4.6% YOY - the lowest since Oct 2021.

Housing continues to dominate the costs of PCE. But, as we know, this housing stat is a lagging indicator. According to both ApartmentList and RentCafe, rents have been falling.

As the real rental figures catch up with the rental figures used in PCE, we should see a positive impact on inflation.

This will indicate to the FED that what they have done is already working and they need to start cutting rates.

Other notable figures from the report:

• Headline inflation fell to 5% YOY from 5.3%

• Core Inflation rose .3% MOM .4%

  • But, fell to 4.6% YOY from 4.7%

• Shelter 0.7% YOY 8.2% - (real-time is closer to 2.5% per real-time rents)

TLDR: The PCE reports headline shows inflation is sticky and taking longer than we thought to slow. But, some key real-time data points indicate what the FED has done is working, it just takes longer to show in the numbers.

The Cul-de-Sac

Mark your GCal 📆

1. April 20th - Existing Home Sales for March

2. May 2-3 - Next FED Meeting

Thanks for reading - that is all we have for today 😎

Please forward this to your friends and colleagues if you found it valuable.

— Michael F DiLucchio