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Federal Reserve takes its time and holds rates steady
Federal Reserve Chair Jerome Powell stated that the central bank's restrictive monetary policy is reducing inflation, but they are not ready to cut interest rates yet.
Inflation eases more than expected in May
Inflation was lower than expected in May, with consumer prices remaining flat compared to the previous month and increasing by 3.3% over the past year.
Homebuyer sentiment dips as rates rise
Despite the recent decline in optimism, sentiment should improve in the coming months. Mortgage rates have started to moderate in the past week, and recent economic reports suggest that inflation may be easing more sustainably.
Homeowner equity rises nearly double digits from a year ago
In Q1 2024, California saw the highest equity gain of all states, with an average homeowner equity increase of $64,000 year-over-year. The state also had the lowest share of homes with negative equity at 0.7%, according to CoreLogic.
Consumers more optimistic about the inflation outlook and their financial situation
The perceived chance of losing their job in the next 12 months dropped to 12.4%, a decrease of 2.7 percentage points. They also expect their household income to grow by 3.1% in the next year, up 0.1 percentage points from April.
With recent economic reports showing some promising signs that inflation could be cooling in a more sustainable fashion for the rest of the year, mortgage rates may moderate in coming months as the daily fluctuations in yields continue. Meanwhile, even though the Federal Reserve decided to hold rates steady in their latest meeting, the central bank is still expected to cut rates later this year but at a more moderate pace than previously anticipated. As such, home sales are projected to improve in the second half of the year, but the growth rate will be slower than what was projected earlier this year.
SOURCE : California Association of Realtors
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