Happy Friday! Brian Manning here with the weekly update. Let's get right to it. Not much to report on for Monday.

Markets were closed for President's Day. Although, we were open. We were pumping out pre-approvals on Monday. Financial markets were closed, so, not much to talk about there. Tuesday this week, we got existing home sales and some information on Leading Economic Indicators.

So, the first thing we wanna look at is existing home sales. This is for the month of January. Existing home sales in January were down 7/10th of a percent month over month. I'm not surprised to see this. Moving into the winter months, median home price, we don't really pay that much attention to because it's not an average, it's not appreciation in median price. We do live really close to inventory.

So, inventory was at 980,000 homes for sale. This is up 10,000 for the prior month. Remember though, back in 2007, at the same exact time, there was 4 million homes for sale. So, nothing like what we experienced in 07, 08. At these numbers right now, 980,000 homes for sale, this is 2.9 months' supply. A normal market, a balanced market, is 4.6 months' supply. But something really important to look at here as well is active listings.

So even though there were 980,000 homes for sale, a good chunk of those were already under contract to be sold. So, active available inventory was only at 626,000 across the country, and that's only 1.9 months' supply. So still very limited inventory. We're seeing the same thing here in Boulder County and across the Front Range. Also, average days on market was 33 days. But what's really unbelievable is 54% of homes sold in less than 30 days. So, homes are still selling quickly as far as first-time home buyers are concerned, and I'm super excited to see this, they make up 31% of all purchase transactions. That's up from 27% last year. So, we're starting to see more and more first-time home buyers jump back into the game.

Cash buyers made up 29% of all purchase transactions. That's a lot of cash still climbing around. And then, investors are still at one out of six transactions at 16%. So overall, I'm not surprised to see this report. Inventory is still low, and I think we're going to see some inventory challenges for the remaining portion of this year. We also got a report here from what's called Leading Economic Indicators.

So, this is a survey that comes out, is based on ten parts of information and looks at what's happening in the US economy. It's an indicator for us going forward as far as what's going to happen potentially with the recession. So right now, in the month of January, this was down 3/10th of a percent in 2023, and we've had ten months in a row of declines, right. So, this is Leading Economic Indicators declining.

Overall, though, for the last seven, six months, excuse me, we've been down 7.4%. This has only happened six times in history, and every time this happens, we've gone into a recession. Typically, if you look at the charts and you look at the data from the high of our leading Economic Indicators to when we drop to this negative four, usually recession happens in about 12 to 13 months, where our peak was December 2021. So, we're really right in that 12-to-13-month range right now. Historically, if you watched any of my updates, you know that mortgage rates are always positively impacted by a recession and they historically go down. So, I'm not surprised to see this, but something for us to keep a close eye on because it would be a slowing in the economy. So, then we had Wednesday this week.

Wednesday this week, we had... Fed voting member James Bullard on CNBC talking about this blockbuster employment report. I don't mean to be a dead horse of this. This report came out on February 2nd. We're still talking about it because you got Fed voting members to make decisions on whether they should keep hiking the Fed funds rate, and they're looking at these reports on the news talking about how their blockbuster reports so let's just take a look at the ... the employment info a little bit deeper.

So, we had James Bullard, Fed Voting member, very vocal saying we have blockbuster employment report. He says unemployment is ticking down and we've had the best employment report ever in 50 years. Now, I don't know about you, I read the news every day. I'm forever seeing information on companies laying off employees. And when I look at the news and the media and the company layoffs, and I look at James Buller talking about the strongest employment market in 50 years, somewhere there's a disconnect. And I'm just not sure what they're looking at.

And of course, it's always concerning because these are people that are voting on whether they should continue to hike the Fed funds rate, which is very impactful for all of us in the room looking at mortgage rates and what's going on. So, if we look at the employment report a little bit deeper... So... In the month of January, said there was 517,000 new jobs that were created.

So, if you look at the trend, you know, we had trend in declining new jobs being created. And this is based on what's called seasonally adjusted. So... And then you look at the employment report that just came out and we had 517,000 new jobs that were created. Well, the challenge that we have here is you have what's called a seasonal adjustment in here. And if you take out the seasonal adjustment and you just look at the raw data, right, how many jobs were created or lost in the US in the month of January? There were 2.5 million job losses. And this is straight from the BLS. They published this information. This is not me making this up. Just over 2.5 million.

The challenge is that the expectation was that there would be 3 million jobs lost. And instead of getting 3 million jobs lost, we had 2.5 million jobs lost. So, when they look at that, they considered gain of 500,000 plus new jobs. So, I would say... I'm not sure I'm going to agree with the way their information is. And I totally understand the way that the seasonally adjusted works. This is a comparison of what a... seasonally adjusted unemployment rate looks at, and then this is if you take out the non-seasonal adjustment.

So, the benefit is you see that just kind of smooth it out and it makes it a little bit more predictable. Whereas when you remove out the non-seasonal adjustment, you know, it's very erratic and it's just going to be a lot more instable and it's a little bit harder to read. But it still blows me away that even when you look at these, you're still touting the best job market in 50 years, which is unbelievable.

So, if you look at the difference, seasonally adjusted show that unemployment went down to 3.4%. So, we had a decline in unemployment, which would equal a stronger job market. that equals expansion in the markets. But if you remove the non-seasonal adjustments, unemployment actually went up to 3.9%. So, I'm not sure if they look at this information. I mean, we find that, we talk about it, but I'm really not sure if they're looking at.

The other thing we have to look at is employment was reported at 894,000 new jobs. And the challenge that we have here is a really big number. So, you have 894,000 new jobs that were created for what they're saying, but they adding here what's called a population control. So, population control means they look at all of the people that were working illegally in the United States in the year of 2022. They add them all together and then they lump them into a population control. They add them into the job market in January 2023 and they add them into kind of like these fictitious jobs that were created. So, when you add in population control, it looked like a really big jobs report. But if you take out population control, unfortunately, it was not a great jobs report for the month of January.

Today, we get the PCE report. So, PCE is a Personal Consumption Expenditure. This measures inflation. This is one of the Federal Reserve's favorite gauges for looking at inflation. It did come back a little higher than was expected. The headline number and the core number were both up 6/10th of a percent. We kind of expected this would be a little bit of a rocky report. I'm not surprised to see this. We just have a couple of months to get through.

We've talked about this in the past. We truly think that, you know, May 10th is going to be a turning point for inflation. I think actually next month, we're going to see some beneficial information that comes out as well. In the beginning of next month, we get another jobs report. But when we get that jobs report in the beginning of March, this is for the month of February, you know, there are items that are not in there such as seasonal adjustments. So, we should start to see more real data on that.

And then, when we get the March 14th CPI report, I think that's going to be more reflective of active inflation data as well. And then, we got new home sales. So, new home sales look at new construction, signed contracts for the month of January. This is always very important for us to look at what is the builder's finger on the pulse of what's happening. So... So, for sale we had 439,000. So, the inventory was down just 5% on a month-over-month basis.

What we're really excited to see here though is that on a month-over-month basis, annual sales were up 7.2%. This is for the month of January, so for the month of December was up as well. So, this is really great to see. Another item we have to look at is just inventory. So, the media latches onto this and they say, okay, well we have... available homes for sale across the country. That's 439,000 and that gives us 7.9 months' supply of inventory.

The challenge is that's not really an accurate number because of the 439,000, only 73,000 homes in new construction across the country are available for sale and ready to be purchased. The rest have not been started, maybe don't even have a hole dug yet. So, if you look at the 73,000 that we actually have available right now, that's only a 1.3 months supply of inventory for new home sales. So, new home sales numbers looking really good. I'm super excited to see positive traction in the builder area.

If you look at builders and you listen to what they say, you know, a credible part of their success right now is that they're offering incentives for buyers, right. Builder were giving 2-1 buydowns or offering permanent buydowns. I think for any of the realtors that are watching this, we're doing the same thing. We do offer 2-1 buydowns. We're offering permanent buydowns. So, if you want to work with us on strategizing on ways to help sell your listings, give us a call. We'd love to help you. I'm around all weekend. If you have any questions, let me know. I'd love to help you with your pre-approval. Let's go through our strategic buyer consultation. If you want to learn about our fast-track approval, how you can close on a purchase transaction in 10 days and compete with cash offers, give me a call. I'd love to help you. Happy Friday. Have a great day.

-Brian

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