Two signs inflation is slowing

During the supply problems of recent years, two products that seemed to be particularly affected – and whose prices rose sharply – were kitchen appliances and cars.

Here are two indications from my mailbox this week that the situation has changed (the first is from a car dealer, the second from Home Depot):

And read these articles:
Economic and mortgage commentary
Federal Reserve increase rates; Mortgage Rates drop
What drives Mortgage rates in one chart
How Marblehead’s 2023 Property Tax Rate is Calculated (more…)

May Inventory shows no improvement

No spring boost for Inventory so far.

Single Family Homes


Mortgage rates

The 30-year Fixed Rate Mortgage fluctuated around 3% for most of 2021. The Fed appeared to many commentators (read my “Party on, dude” says the Federal Reserve posted in March 2021) to be taking an overly optimistic view about inflation; its indication of a policy reversal late in 2021 sparked a jump in the crucial 10-year Treasury (10T) yield  and hence in mortgage rates. With inflation continuing to soar well beyond the Fed’s preferred 2%, interest rates climbed in 2022, driving mortgage rates to a multi-year high.
As inflation appeared to slow, so the yield on 10T dropped, leading to a drop in the FRM of 1% in early 2023. Inflation, however, remains stubbornly high – and the labour market stubbornly strong- causing interest rates and the FRM to move up again, before the crises at a number of banks drove Treasury yields – and hence the FRM – lower again.
In recent weeks the FRM has been mainly in the 6.25-6.5% range.

And these recent articles:

Economic and mortgage commentary
Federal Reserve increase rates; Mortgage Rates drop (more…)

July Inventory shows welcome increase

There has been a sharp increase in the number of properties for sale in the last four months, but while this takes inventory of SFHs above the year ago level, it remains below that of 2020:

Single Family Homes

Housing Inventory


The number of Condos available has also jumped, but in this case still remains below year ago levels:


Has Inflation Peaked?

After I published Have Mortgage Rates peaked? last week a reader asked me why I thought the yield on the 10-year Treasury Bill would not continue to increase, so that even if the spread over the 30-year Fixed Rate Mortgage (FRM) narrowed, the FRM rate itself might still increase.

In Are we already in a Recession?, published on June 18, I wrote: “Just as the yield on 10T has more than doubled since pre-COVID while the Fed Funds rate is unchanged, so the Fed Funds rate can increase sharply – the Fed is forecasting it will reach 3.4% this year, also double its pre-COVID level – without necessarily impacting the yield on 10T. That will depend upon the economic outlook. Ironically, perhaps, the more determined the Fed is to drive down inflation – even at the cost of a recession and higher unemployment – the greater the chance that the yield on 10T – and by extension the FRM – will decline – at some point.”

In the last few days, as more economists talked about a recession after the Atlantic Fed updated its Q2 GDP estimate to minus 2.1% (it was 0% when I wrote on June 18), the yield on 10T has dropped sharply, falling to 2.9% from a peak of 3.5% in the middle of May: (more…)