Even though the 10-year Treasury yield had backed down from touching the 5% mark in late October, at the start of this week it had ticked up to just south of 4.7%.

But once the CPI release on Tuesday indicated slower than anticipated growth in inflation, the yields turned downward again as the market became more convinced that the Federal Open Market Committee will not raise rates.

In the aftermath of the release, the 10-year was down to 4.43% on Tuesday. Rates have stayed close to that level, but as of 11:50 Thursday morning it was at 4.47%.

While mortgage rates and the 10-year Treasury move independently of the FOMC's actions, investors typically bake their expectations into those longer-term instruments.

Data on the Optimal Blue website put the 30-year conforming at 7.409% on Nov. 15, up from 7.338% the previous day. But on Nov. 13, the 30-year FRM was at 7.534%. On Nov. 8, it was 7.444%.

Zillow's rate tracker had the conforming 30-year FRM at 7.09% mid-morning on Thursday, up 5 basis points from Wednesday but down from last week's average of 7.25%.

"Federal Reserve officials' speeches, higher than expected retail sales and inflation data signaled that an immediate Fed policy reversal may not be in the cards just yet," a Wednesday statement from Orphe Divounguy, senior macroeconomist at Zillow Home Loans, said. "Although inflation is cooling and the market expects that the Federal Reserve may be done raising its policy rate, core inflation is still higher than the Fed's target."

But not all the news was bad, Divounguy said. That recent decline in the 10-year yield should ease financial and credit conditions. But increased government borrowing counters that, meaning that monetary policy has to remain in a restrictive phase.

Still, "so long as core inflation continues to move in the right direction, mortgage rates may finally start to level off," said Divounguy. "Less rate volatility would be welcome news for prospective homebuyers."

At a recent National Association of Realtors event, the group's chief economist Lawrence Yun said that with a 4.4% 10-year yield, at a 200 basis point spread, the high end of historic norms, the 30-year FRM really should be at 6.4%. "The bond market is forcing the Fed to pivot."

But Yun also believes that the Fed Funds Rate as well as mortgage rates, have peaked, but "the question is when are rates going to come down?"

He thinks the 30-year FRM will be between 6% and 7% for the spring 2024 home buying season.

Nigel Green, CEO of international asset management firm the deVere Group, does not think the Fed will raise rates in December.

"However, we believe there will be a sustained period of slower progress than we've seen up to this point against inflation in the flight to get it back to the 2% target," he said in a press release. "Therefore, we except one more hike from the Fed next year to boost that progress a little."

Redfin, in a Nov. 16 press release, not only states that the Fed is not likely to raise short-term rates this year, it is likely to start reducing them earlier than the markets expect.

The CPI for shelter, a lagging indicator, was up 0.3% from the prior month and 6.7% the previous year, noted Ksenia Potapov, an economist at First American Financial.

"As we head into 2024, rent and house price declines from the past year will increasingly drag down overall inflation," Potapov said in a statement. "At this point, the Federal Reserve's greatest inflation-fighting virtue will be patience."

Marty Green, principal at the mortgage law firm of Polunsky Beitel Green, has believed for some time the Fed was done raising rates in this cycle, and "this report supports that," he said.

"We expect the Fed to continue to keep their rhetoric about their readiness to raise rates if necessary, but believe, based on the trend of recent reports, that they will see little reason to do so," Green wrote in an email.