Yahoo Finance

Shelter is still the stickiest component in the Consumer Price Index. It rose 5.2% on a year-over-year basis in August. Meanwhile, if you take a look at data from CoreLogic, price growth has been under 5% for three consecutive months, rising just 4.3% year-over-year in its July data. So, what is the outlook for home price affordability? Joining me now, we've got Bob Brooksmith, who is the president and CEO of Mortgage Bankers Association. Great to have you here on the program with us, and taking the time. So, just help us make sense of what we're seeing in CPI versus what the reading was out from CoreLogic for their July data, and ultimately, what this spells out for the future of the, at least near term perhaps, of the home buying reality for so many prospective buyers.

Thanks for having me on, Brad. And yes, it is true that home prices continue to increase in the low to mid single digits, as the CoreLogic numbers suggest there. And that has been a surprise given that you would expect with rates having risen from their lows, now we're seeing nice rebounds to lower levels, but still up a good deal from their lows. And, uh, affordability worsening, you might expect that home prices would fall. But what that really indicates is this stubborn supply gap between the housing that Americans need and the housing that's available. So that's why you see housing pricing increasing faster than the CPI, but we are seeing a lot of green shoots with mortgage rates having come down nicely, and we think with more room to come down further.

You know, it's really interesting. One of the things within the CoreLogic data, at least, they said much of the sluggishness can be attributed to high mortgage interest rates continuing to challenge the housing market, and buyers remaining cautious, sales remaining low. However, the highly anticipated cuts from the Federal Reserve this fall may help improve some of the consumer purchase sentiment for the housing market. To what extent are you expecting some of those cuts to actually lead to more purchasing activity, or at least the sentiment to change dramatically here?

Sure. Well, we've already seen in mortgage rates anticipation of the Fed cuts coming in the short-term rates because, of course, they control the short end of the yield curve. But the 10-year treasury has fallen nicely, and mortgage rates have followed. We just have about a 6.27% interest rate, which is down over 80 basis points from recent figures. And so it is getting more affordable, and we are also seeing encouraging signs on the inventory side because if there are more people who are willing to put their houses on the market, even though perhaps they have rates that are well below today's rates, you're going to start to see some more movement. And we're seeing our purchase applications increase, albeit slightly, but we are seeing a really big increase in refinances. Well, we're more than double in terms of numbers of refinances today from a year ago. Now, granted that's from a low base because most people's rates are still low, but people who've gotten loans in the past year and a half or two now should really look at whether it makes sense to refinance and save on that monthly payment because, as I said, the mortgage rates have already incorporated the anticipated or some of the anticipated Fed cuts.