The Fed Talked. The Market Yawned.
Why rates are holding steady and what it means for you.
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 this week, we had new home sales. These are signed contracts in December. This was up 6.7% on a year-over-year basis and up 3.6% on a month-over-month basis. It’s great to see buyer activity in December and great to see more homes going under contract.
Then, on Wednesday of this week, it was Fed Day. The Federal Reserve began its meeting on Tuesday and concluded on Wednesday. Jerome Powell, chair of the Federal Reserve, gave a speech followed by a press conference and a question and answer session. The Fed held rates flat- which I wasn’t surprised to see. The anticipation before the Fed meeting was that rates wouldn’t change. At this meeting, the Fed answered a bunch of questions. Its sentiments were that maybe inflation has stalled and the progress they hoped for might not be coming to fruition, but I think most expected to see that. So, not really a big market reaction this week from the Federal Reserve meeting. Everything was in line with expectations.
Then today we get PCE which stands for personal consumption expenditure. This is the Federal Reserve’s favorite gauge of inflation. PCE was unchanged with the core rate at 2.8. The core rate strips out volatile items such as food and energy. I feel like I’ve said this for years now- probably two- but we have the shelter component in there. Shelter makes up a large percentage of this inflation reading, and shelter still shows that it’s going up at a rate of 4.7%. What’s interesting is if we look at real-time numbers, like rents, for example, the shelter’s only going up at 1.5%. When we look at rents, this is a combination of new leases being signed and lease renewals. We have to look at a merger of the two numbers because the shelter component shows that those are going up at a rate of 4.7% making it frustrating to watch the inflation levels remain elevated. This is because you look at these shelter numbers that remain high but when looking at real-time numbers the inflation would be more appealing which would eventually have a positive impact on mortgage rates. So, here we are still waiting for this shelter number to catch up with us. We’re just gonna have to wait and see what happens.
I can’t believe next week is jobs week already. The first week of every month we get the jobs report. I’ll have to wait and see what happens there and I just can’t believe that January is already behind us.
Realtors, we have an amazing class that we’re doing right now. It’s Winning the Listing Presentation.
We’ve done them in Boulder. We’ve done them in Denver. I have some more upcoming classes coming in Fort Collins, Colorado Springs, and then back to Boulder and Denver. I’m super excited. The content is probably my favorite yet. The feedback has been phenomenal. If you can make it, please RSVP, we’d love to have you there.
I’m around all weekend. If you have any questions, let me know. I’m available 8 am to 8 pm seven days a week. Reach out to me anytime.
Hope you have a great day!
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