Friday Market Update: May 12th 2023

As Inflation Moves lower, Mortgages Rates Move Lower!

Happy Friday! Brian Manning with the weekly update. Let’s get right to it. So, Monday and Tuesday of this week were relatively quiet news days.

Everything was just leading into with anticipation going into Wednesday, which is when we got the CPI report. So, every month, we get two inflationary reports. We get the CPI, which is the Consumer Price Index.

We get the PCE, which is the Personal Consumption Expenditure. CPI, we actually look at and put the most weight on because we think that’s probably more accurate because it does include out-of-pocket housing expenses and out-of-pocket medical expenses. So… got this reading, which is really great to see. So, we had the CPI number decline from 5% down to 4.9%. So, good to see a decline there.

With the core rate, which strips out volatile items such as food and energy, the core rate moved from 5.6% to 5.5%. So, we truly feel like this is really a starting point and positive movement for inflation. This is not the end-all. This is probably a starting point that we’re going to see moving into the summer. We’re going to continue to see a decline in inflation, which is very helpful for mortgage rates. This is all very welcoming news. We’re super excited to see it.

You know, we’re year ago, this number was at 9%. So, to go in one year from 9% down to 4.9 is a really huge move.

You know, I listen to people like Jerome Powell talk and they say, oh, you know, they’re worried about inflation. They think inflation is sticky. Last time I checked, when you move from 9%to 4.9 in a year, that’s not sticky. And we’re really going to continue to see positive movement. Part of the challenge in this report that we got that didn’t give us a better reading on inflation was oil costs. There was just a bump up in oil prices last year. It was just kind of a blip, really, because the US said that they were going to restock their reserves, which they didn’t. And then OPEC kind of came back and retaliated a little bit and had a bump in oil prices. But that’s kind of water under the bridge now.

So, going into the next month with oil now being more reasonable, where it was leading into this report, you’re just going to see more and more improvement. So, I truly think when you look at these reports coming up, we look at the report we’re going to get in May, we look at the report we’re going to get in July, we’re going to continue to see downward pressure on inflation. We’re going to continue to see positive movement in interest rate.

You’re going to see significant moves lower in interest rates! And the challenge is, if you’re a buyer and you’re not jumping in right now, and you’re waiting for lower rates, and you wait till July or August for rates to move lower and there’s still record low inventory in the market, there’s just going to be an imbalance of supply and demand, and the real estate market is going to get hot.

So… Here we go again. Take my word for it. Q4 was the low in the real estate market and it’s just going to get better from here.

Thursday this week, we had PPI. So, PPI stands for the Producer Price Index. This measures inflation at the wholesale level. So, PPI moved from 2.7% to 2.3%. At the peak a year ago, this is at 11.7%. So, really good to see that the inflationary numbers from a wholesale level are moving down as well.

We also get initial jobless claims. So, we get initial jobless claims every week. This is for new people filing for unemployment for the first time. This is up 22,000 people. This is now running at about 264,000 people, which is a pretty elevated number. Again, we have to continue to look at the job market leading into recessionary indicators. Another area we look at as well is ZipRecruiter. They put out a report as well this week and looking at and talking to top companies across the US.

Almost all top companies are saying that they’re scaling back or stopping their hiring plans for right now. So… Certainly, seeing a little bit of stall in the employment market, which, again, is going to help on the inflationary pressure, and it’s going to help mortgage rates as well.

I’m around all weekend. If you want to learn how we can close a purchase transaction for you in ten days, give me a call. If you want to go through our strategic buyer consultation, I would love to help you.

Happy Friday. Hope you have a great day.



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