The yield on the 10-year Treasury has dipped back below 3%. It is currently sitting at 2.924%. The yield on the 10-year treasury hit a recent higher of 3.48% on 6/14/22. Before that, the last time the 10-year Treasury yield was above 3.48% was 10 years ago (January 2011).
Looking back to early 2011, the economy was still coming out of the 2008 financial meltdown. The recession of 2009-2010 was set off primarily due to housing. It was one of the only US recessions that were led by housing. Before 2011 yields were above 3.5%. In early 2006, while still in an overheated housing market the yield stood at 5.15%.
The 10-year Treasury yield dipped this week, even though we still see outsized inflation rates. While there are still expectations that yields and rates will continue to rise with inflation, there are now some opposite voices being heard.
Some investors feel that we are looking at an inevitable recession. There are some signs of an economic slowdown. Commodity prices such as oil, lumber, and copper have dipped over the past few weeks. These dips indicate that consumers are pulling back and overall demand is dropping.
Recently, we have also seen record numbers of homebuyers pulling out of contracts. When homebuyers pull out of purchase contracts, it is generally because they fear an economic downturn. Potential buyers may be concerned about a job loss or job change. Concerns about a reduction in income or income loss exist. Some potential buyers may also be concerned about reductions in property value heading toward the end of the year.
Homebuyers may be more hesitant to put money down on a property that could potentially dip in value in the coming year.