Friday Market Update for the Week of January 29th

Happy Friday, Brian Manning here with a weekly update. Let’s get right to it, so. Tons of news to talk about this week.

Monday was a relatively quiet news day, not much to talk about there. Tuesday of this week we got Case Shiller So Case Shiller tells us every month what home appreciation is looking like, and on a year-over-year basis Case Shiller came out and told us we are at 9.5% which is just phenomenal. Also on Tuesday we got FHFA and they tell us about home appreciation. So FHFA looks at homes appreciating across the country. They have a conventional mortgage attached to them, in the month of December on a year-over-year basis home appreciation was up 11%. So Phenomenal just to continually see a really strong and robust housing market. Zillow put out a report this Tuesday as well and it’s their predictions for 2021, so their prediction is that we are going to see 10.5% home appreciation in the year of 2021 and that we will also see sales up 21%. So just continual very strong housing data.


Wednesday of this week we had the Federal Reserve talking, Jerome Powell and everyone expected this but they are going to keep rates at their near 0 level where they are right now. and basically for all of us in the mortgage and real estate industry, the Federal reserve has our back. They’re very much involved in this bond buying program, they’re buying a tremendous amount of bonds every month which is 10 year treasuries and mortgage back securities. Basically the Federal Reserve is forcing keeping mortgage rates down right now. If the Federal Reserve did not have this bond buying program rates would be significantly higher so we all need to thank Jerome Powell and the Federal Reserve because this very low interest rate environment that we are in right now is completely a byproduct of what the Federal Reserve is doing. So they have our back, they are definitely helping us out here.

Thursday of this week we got new home sales. New home sales for the month of December on a year-over-year basis was up 15%. Just unbelievable. And also we figured out that 33% of new construction homes under contract right now haven’t even been built. So the new construction market is on fire and certainly very strong and builders just can not build houses fast enough. We also got GDP rating for Q4, so GDP had increased 4% for Q4 in 2020. What’s interesting though this is about 1.2% lower for the same Q4 reading in 2019. So as we all know there were just struggles in the US economy last year.

Today, Friday we got pending home sales. Pending home sales for the month of December was up 21%. Unbelievable and the highest reading ever for the month of December, so just phenomenal. I can’t even imagine going into the spring. This spring is going to be a ridiculous home buying season, refinancing is still going strong. I’m so pumped for what’s happening right now, it’s unbelievable. I will tell you this though, there is the $15,000 tax credit floating around for first time home buyers with the administration  if this comes out it’s going to be a disaster and the reason why is you know, everything we just talked about. Home appreciation is up, home buyers are up, inventory is down 23% and now if you add in a whole another group of buyers right now with the $15,000 tax credit that’s more people going in and bidding up the price of homes over list price, it would be a disaster. So hopefully they hold off on this, they do a little more research into the market, and I’m a huge believer in first time home buyers, I’m a huge believer in incentives and tax credits and what they want to accomplish just the timing is very poor and if they add it in too soon in this year it’s gonna make this market even more challenging than it already is.

Last thing today we got the PCE, that’s called the Personal Consumption Expenditure.This is the Federal Reserve’s favorite gauge of inflation, it’s very important because the Federal Reserve looks at inflation and inflation is the enemy of interest rates. As inflation goes up rates are going to go up so we always think it’s good to see tame inflation. So we look at what’s called a core and a headline rate. So the core rate is when you strip out volatile items like food and energy. So the core rate was at 1.3%, I’m sorry, it went from 1.4% to 1.5%. So inflation is still very tame Something we want to watch because we are seeing some increases here but it’s not out of control right now. I’m around all weekend, if you have any questions let me know. I’d love to help you any way I can. If you are a realtor and you need a revised pre-approval, call me, text me. If you are a client and you want to get pre-approved or you want to talk about rates or anything that’s going on in the market, just reach out to me, I’d love to help you in any way.

Happy Friday, I hope you have a great day!