You might have noticed from November through December, and ending around Christmas that mortgage rates increased at an incredibly fast pace. Perhaps the quickest in history. Things mellowed out a bit around Christmas, when most people were on vacation, and then ramped-up again at breakneck speeds through January. Rates seemed poised to jump out of a metric called the "consolidation pattern" leading into this week; that is until the Feds made a statement at the beginning of the week addressing all the small changes made to the policy statement...see the tight range in the chart below.
Then we saw something remarkable happen; rates stayed in the 2.44% trading range, remaining largely inside the "consolidation pattern", and hitting the brakes on the accelerated rate increase.
We believe this de-volatilization of the rate may also be attributed to a few key economic reports released this week. Namely the nonfarm payroll "big jobs" report. What we are seeing is that even though payroll has grown faster than expected, wage growth has had a hard time keeping up. Any metric related to wage is followed very closely by the Feds, because rising wages are an important indicator of impending inflation, and thus rate hikes.
Relating to home sales specifically, December was a great month for pending home sales, finishing the year up 1.6 percent, although in a short-term downward deviation from expected growth rates. Despite this deviation, pending home sales currently sit at what we would conventionally call "healthy levels"