Happy Friday! Brian Manning here with the weekly update. Let's get right to it. Monday this week relatively quiet news day. Not a lot to talk about there.

Tuesday this week, we got some feedback for home appreciation across the country. FHFA looks at homes across the country with conventional mortgages attached to them. So, there are not jumbo mortgages cash buyers. This is just homes across the country with conventional mortgages. Home appreciation was up 2/10th of a percent on a month-over-month basis. On a year-over-year basis, up 5.3%.

We also got Case-Shiller giving us some feedback. Case-Shiller looks at all housing across the country. So, investors, cash transactions, government loans, conventional loans, etc, this was down 2/10th of a percent on a month-over-month basis, but still up 3.8% year-over-year. You know, I'm still really impressed with these reports. It still shows how resilient the housing market is. We had 121 months of straight appreciation, and here we are down 3% from the absolute peak. So, you got to be careful, the media, which you pay attention to, and the negativity that's out there, because when you have 121 months of really strong appreciation to get these insane numbers that we got to, and you're only down 3% from the top. That's pretty minimal decline to see right now. So, we're pretty stoked to see the appreciation numbers that are out there.

We also got some feedback from Apartment List. This looks at rents across the country. Rents are going up at 2.6% on a year-over-year basis. We'll look at that more in a minute. Just to get some feedback on how that impacts the CPI report and also, the PCE. Wednesday this week, we got pending home sales. So, this is signed contracts in the month of February. This is actually a really good report. It was up 8/10th of a percent and expectations was that it would be down 3%. So, a much stronger than expected pending home sales report.

So, again, just seeing how resilient the housing market is and the strength that we have in the market. I really, truly, personally feel like Q4 was probably the low in the market. I think when we look back on the housing market and we look back, you know, after a year or two has gone by, I think Q4 of last year is going to be the low because we're definitely seeing a lot more traction in the marketplace. We're back to seeing multiple offers, competitive bids. So, I really, truly think that Q4 is probably the low of the marketplace.

Thursday this week was a relatively quiet news day, leading into today... Excuse me! Because today's big report was the PCE. That's the Personal Consumption Expenditure. Let's take a look at this real quick and give you some feedback on what the PCE looks like. So, PCE, this is for the month of February.

This is the Federal Reserve's favorite gauge of inflation. And... If you look at the month of February, first, we look at the headline numbers. So, this is everything included. So... Inflation was up 3/10th of a percent versus the expectations to be up 5/10th of a percent. So, that was a pretty good number to see the difference there.

Inflation from the headline number moved from 5.3% down to 5%. So, we had some good traction on inflation there. The core rate strips out volatile items such as food and energy. The core rate was up 3/10th of a percent. Expectations was that it would be up fou4/10th of a percent.

So... Pretty much in line with expectations. And the core rate of inflation moved lower from 4.7% to 4.6%. So, pretty flat there. What's interesting to look at though is that shelter costs, if you look at rents were up 7/10th of a percent and 8.2% year-over-year.

Well, we just got Apartment List telling us that rents are going up 2.6 on a year-over-year basis, but here the PCE report is telling us they're going up 8.2%. We've talked about this a lot in the past and this just has to do with the lag in shelter costs. What also... we want to look at here is just Apartment List and the National Rent Index. So, if we look at, going back to 2018 and going here into 2021, we had this peak here, which was right around November of 2021.

What's insane if you think back at this time in the Federal Reserve and the voting member, so many Federal Reserves were saying inflation is transitory, inflation is not an issue, in fact, we need more inflation. And they just completely ignored this incredible ridiculous rise in rents. And at this time, because it's a lagging indicator in the inflationary reports, the inflation reports here showed that shelter costs were only going up like 3%, 3.5%, whereas here the true numbers were going up 18%.

So, now, you have true shelter costs come down, you have Apartment List telling us the rents are going up 2.6% year-over-year. But... But if you look at the PCE, the Personal Consumption Expenditure, and you look at the shelter cost component, this is telling us that costs are going up by 8.2%. So... We're definitely seeing a disconnect.

We've talked about this in the past. There's a lagging effect because the shelter costs and PCI are looking at an average and what the numbers were a year ago. I don't know when it's going to happen. For sure, at some point in time, there's going to be a turning point. You're going to see an apex in the shelter cost in the PCE report, also in CPI. And inflation is the absolute enemy of interest rates.

So, when you start to see inflation really come down and really get in check, that's absolutely going to assist us with mortgage rates coming down. So, the question is really, and I don't know the answer, hopefully, it's sooner versus later. The question is, when will shelter costs and these inflationary reports peak? If Apartment List is telling us rents are going up 2.6% and PCE reports telling us it's going up 8.2%, hopefully, sometime in the next month or two, you get an apex in that, and we start to see the shelter costs come down, because when shelter costs come down, all of these inflationary reports are going to look significantly better. And this is absolutely going to positively impact interest rates.

So, we have to keep a close eye on this. I'm around all weekend. If you have any questions, let me know. If you want to go through our fast-track approval process, learn how we're closing purchase transactions in 10 days, call me on my cell phone, text me. I'd love to help you. Happy Friday. Have a great day.

-Brian

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