Love Is in the Air… But What About Lower Rates?
CPI, mortgage trends, & what’s heating up in real estate.
Join me in our ‘Weekly Market Update’ to decipher what to expect in the coming weeks & months.
Happy Friday! Brian Manning here with the weekly update. Let’s get right to it.
On Monday, we had some changes at the CFPB—that’s the Consumer Financial Protection Bureau. A new director was put in place, and they sent home about 1,700 employees, telling everyone to stop working on what they were doing. We’ll have to wait and see what happens with the fate of the CFPB. It’s kind of up in the air right now. This is definitely one of the big governing bodies for the banking system, mortgage lending, and more, so it’s something to keep an eye on.
On Tuesday, we had Jerome Powell speaking. He said inflation is moving closer to where he wants to see it and that employment remains solid in the U.S. economy. One thing I’m watching—and no one has really talked about this yet, so I don’t know if this is accurate or not—but I’m curious to see how it plays out:
The Federal Reserve has two mandates. One is price stability, which means controlling inflation in the U.S. economy. The second is employment stability. With everything happening in the government right now and the number of people potentially being laid off, I’m wondering if that will increase unemployment. If unemployment numbers rise, that could be a reason for the Fed to cut interest rates. Again, no one’s discussing this yet, but if employment stability is a core mandate and we start to see job losses, that could be a catalyst for future rate cuts.
On Wednesday, we got the CPI report—Consumer Price Index—which came in hotter than expected. It was up 0.5%, while expectations were for 0.3%. Markets didn’t like that number, and mortgage rates worsened because of it.
Diving deeper into the CPI culprits:
- Used cars
- Car insurance
- Shelter
- Lodging away from home
If we strip out those items (other than eggs—laughs), most goods in the U.S. economy remained stable in price. But those categories really drove the increase in inflation.
On Thursday, we got PPI—the Producer Price Index—which measures inflation at the wholesale level. PPI was up 0.3%, right in line with expectations. Markets actually liked that, especially after Wednesday’s poor inflation report, which had pushed interest rates higher. The PPI report helped bring rates back down, which was great to see.
Today, Friday, we got retail sales, which measure the strength of the U.S. consumer. Retail sales were actually down 0.9%, while expectations were for a 0.3% decline.
Right now, consumer debt—specifically credit card debt—is at $1.2 trillion. That’s 41% above pre-COVID levels. I’m starting to wonder if consumers are getting maxed out. Credit card debt is at an all-time high, and credit cards have limits. If people are maxed out and consumer spending slows, that could impact the broader economy. Definitely something to watch.
For mortgage rates, it was a bit of a seesaw this week. On Wednesday, rates moved up due to the CPI report. But on Thursday and Friday, we saw a nice move lower, which is great news.
One more thing I want to touch on is delisting in the housing market. The media has been talking a lot about properties that were listed in December but taken off the market. There’s a ton of chatter about how this is a huge number, but I put together a graph that goes back to 2004-2005, and here’s what it shows:
Every single year, there’s a spike in delistings in December. History repeats itself.
Yes, we saw a higher-than-normal spike in December 2023, but if you look at interest rates, they moved higher in October, November, and December compared to August and September. Higher rates in historically slower months like November and December naturally lead to more delistings.
I wasn’t surprised at all by this, but you have to watch out for the media’s doom-and-gloom narrative. They’ll make it sound like the housing market is collapsing, but if you step back and look at historical trends, this happens every year.
I’m around all weekend. If you have a buyer who needs to get pre-approved, give me a call—I’m available seven days a week, 8 AM to 8 PM.
Realtors—we’ve got the Winning the Listing presentation happening now. I absolutely love this content. We’ve done four sessions so far, and I just presented in Colorado Springs this week to a sold-out crowd—it was phenomenal.
Next up: Wednesday at Capital Grille in Denver. We have three seats left before it’s sold out. If you want in, definitely RSVP. These sessions have been amazing, and I can’t wait to see everyone there.
Happy Friday—hope you have a great day!
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Brian@BrianManningTeam.com
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