Mortgage rates continue to rise
Average long-term U.S. mortgage rates continued to rise this week. The rate on the benchmark 30-year loan breached 3.5%.
Home loan rates have been running in recent weeks at levels not seen since early 2020, when the coronavirus pandemic was breaking in the U.S. They remain at historically low levels, however.
Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year loan rose to 3.56% from 3.45% last week. By contrast, it stood at 2.77% a year ago.
The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, jumped to 2.79% from 2.62% last week.
Mortgage rates have been expected to rise this year after the Federal Reserve announced last month that it would begin dialing back its monthly bond purchases — which are intended to lower long-term rates — to slow accelerating inflation. But even with the expected three or four rate increases in 2022, the Fed's key rate would still be historically low at around 1%.
Last week, the government reported that inflation spiked to 7% in December from a year earlier, the sharpest such increase in four decades. In addition, the Labor Department reported that prices at the wholesale level surged by a record 9.7% last month from December 2020.
In addition to surging inflation, experts expect robust economic growth and the tight labor market to continue to push rates higher.
Freddie Mac economists expect the higher mortgage rates to bring a modest decline in purchasing demand ahead of the spring homebuying season. They note that the supply of homes available for sale remains tight and prices are still high.
Airbnb plans office in midtown Atlanta
Airbnb, the online platform for listing vacation rentals, will open its first Atlanta office in a new development in the west Midtown area.
Airbnb will open an office later this year at the Interlock, "subject to pandemic conditions," the company said in a news release. The Interlock is a mixed-use development at the intersection of 14th Street and Howell Mill Road that includes office space, retail and residential units. The new Airbnb office is affiliated with Georgia Tech's Advanced Technology Ventures, a group that helps student and faculty entrepreneurs launch start-up businesses.
Airbnb did not say how many workers it will hire for Atlanta or provide the amount of its financial investment. Airbnb first announced its Atlanta plans in February 2021.
San Francisco-based Airbnb is one of several West Coast technology companies that have opened or plan to open Atlanta offices. Airbnb, Google, Microsoft and Cisco have said Atlanta will boost their efforts to recruit people of color with technology skills. Airbnb has an Atlanta-area connection. One of its co-founders, Joe Gebbia Jr., grew up in metro Atlanta and is a graduate of Brookwood High School in Gwinnett County. Gebbia last year donated $700,000 to the school for its arts program and new athletic facilities.
Peloton shares drop over cutback report
Peloton's shares tumbled on Thursday after a media report said the exercise and treadmill company was temporarily halting production of its connected fitness products amid waning consumer demand.
Shares fell nearly 24%, or $7.62 to $24.22 on Thursday on the report.
Peloton Interactive Inc. plans to pause production of its main stationary bikes for two months, from February to March, according to CNBC, citing confidential documents. The news site said that it already halted production of its more expensive Bike+ in December and will do so until June. It won't manufacture its main treadmill machine for six weeks, beginning next month. And it doesn't anticipate making any of its more expensive Tread+ treadmill machines in fiscal 2022, according to CNBC.
The move is the latest in a string of bad news for Peloton, which was one of the early pandemic success stories. In May, it halted production of its Tread+ treadmills, after recalling about 125,000 of its treadmills less than a month after denying they were dangerous. One was linked to the death of a child, while others were linked to injuries of 29 others.
Last August, the company cut the price of its main stationary bike — the product that was the cornerstone of its original popularity — by $400 because of slower revenue growth.
Home inventories fall to 20-year low
Sales of previously occupied homes fell in December for the first time in four months as many would-be buyers were frustrated by a lack of available houses, which fell to the lowest level in more than two decades.
Existing home sales dropped 4.6% last month from November, to a seasonally adjusted annual rate of nearly 6.2 million, the National Association of Realtors said Thursday. The demand for homes remains healthy, the Realtors said, with median prices jumping nearly 16% from a year ago to $358,000. Homes sold in an average of 19 days, slightly higher than in the summer but still quite rapid.
— Compiled by Dave Flessner