Mortgage rates hits highest since 2000 – Demand drops – Home sales slump – Inventory takes a hit

With so much happening all at once it can be easy to feel like we’re not in the middle of a storm; however, it is vital to face facts and address what’s happening in real estate and mortgage. On deck today we have real estate Inventory growth is slow, Home sales fall again in July, as supply drops to near quarter-century low, Mortgage rates hit their highest point since 2000, Weekly mortgage demand drops again, as interest rates match a 22-year high.

Jerome Powell & The Fed Prepared to Raise Rates Further

Mortgage rates had a pretty rough go about things last week. There was a significant spike in rates to begin the week and then things settled down more towards the end of the week. But the wild volatility is what we have been talking about for a very long time and it is what everyone should be expecting for the weeks and months ahead. If you missed our previous conversations regarding the relationship of mortgage rates and the mortgage-backed security market to the 10 year yield, it is a great indicator of where we are going based on where we have been. Given the fact that the Federal Reserve is trying to fight inflation, restore price stability, and increase unemployment, the forecast is for more volatility not less.

This week will be no exception as we are coming off of the BRICS summit as well as the Federal Reserve’s Annual Jackson Hole symposium both of which had bombshell announcements. As for the BRICS summit they made even more progress last week by adding 6 new member countries to the group in their effort to advance a new basket of currency exchange separate from the US dollar. So what will happen to the dollar? Only time will tell, but as for now a new competitor is warming up in the bullpen.

As for the Federal Reserve, last week’s Jackson hole symposium really overshadowed a lot of last week’s economic data releases. In summary last week’s Jackson Hole symposium revealed that Jerome Powell and the Federal Reserve are still concerned about inflation and went as far to call inflation “too high” and warned that “We are prepared to raise rates further” This should come as NO SURPRISE to those of you paying attention. You would have to literally ignore what they’ve been telling us to think there’s a Pivot on the horizon, let alone rate cuts by the end of year. Aside from a catastrophe of some sort that mandates a knee jerk course correction…it’s not gonna happen people!

While acknowledging that progress has been made, the central bank leader said inflation is still above where policymakers feel comfortable. The speech resembled remarks Powell made last year at Jackson Hole, during which he warned that “some pain” was likely as the Fed continues its efforts to pull runaway inflation back down to its 2% goal. A strong economy and decelerating inflation also give the Fed room to “proceed carefully” at upcoming meetings. All of which is short code for we have more rate hikes in the tank if things don’t start to get better for us. Be forewarned and ready for the September meeting, it will be watched very intently by the markets.

So with that, let’s take a quick look at what’s coming up in the markets this week.

Tuesday: We get the S&P Case-Shiller House Price Index (HPI) which began this year in the positive, but then turned negative starting May 2023…and to this day remains in the negative with yet again another month of negative reading expected this week. If it does come in negative it will mark the 4th month in a row. Not to be outdone, Consumer confidence reading and JOLTS job openings also come out.

Wednesday:  We get ADP non-farm payroll employment change, preliminary GDP and pending home sales. This set of releases is important leading into September because the Fed had previously told us that they are closely watching inflationary and jobs related data in order to drive their decisions moving forward.

Thursday: Core PCE and Unemployment claims both some out, once again adding more data to the stack to help the Fed come to their conclusions about whether to Hike rates in September or pause.

Friday: Marks the beginning of the new month where we will see Average Hourly earnings month over month, non-farm employment change, unemployment rate, ISM Manufacturing PMI and ISM Manufacturing Prices.

This is yet again a jam packed week of data the Fed needs and WE NEED to gauge the pulse of what to expect leading up to the September Fed meeting.

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

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Mortgage Delinquencies & The Fall 2023 Housing Forecast

Boy oh boy this weeks show has a LOT packed in it. The Mortgage Bankers Association (MBA) reported that the mortgage delinquency rate fell to its lowest level since it began tracking this metric 43 years ago, supporting claims the economy is on the cusp of a turnaround – but is it?

Affordability fell across the board due to surging home prices. The median sale price in high-opportunity neighborhoods grew 100% since 2012, while the median sale price in low-opportunity neighborhoods jumped 174%.

Fannie Mae’s most recent “Home Purchase Sentiment Index” (HPSI) reveals 82% of consumers reported that it’s a “bad time to buy” a home, a new survey high. It’s up from 78% in June. That’s a bad sign for real estate.

There are about 10% fewer homes on the market now than there were in 2022 at this time. In 2022, mortgage rates climbed rapidly and inventory climbed rapidly. That’s the Altos Rule. When mortgage rates eased down in the beginning of the year, so did the available inventory of unsold homes. Now, rates are not falling. They’re staying stubbornly higher around 7% so inventory hasn’t yet started its decline for the fall. Look for that decline to start in September with fewer sellers, unless rates jump like they did last September. Mortgage

No Pivot, No Rate Cuts – Fed to pause or raise rates Fall 2023…They already told us this!

Mortgage rates were up last week. This is sorta par for the course right now as bond traders, investors, Central banks and governments grapple with inflation, the reality that monetary policy may have to remain in place for longer than they initially intended, and remain at elevated levels. It’s become abundantly clear that there are no rate cuts on the horizon and if there’s another pause it’s not totally because everything is turning the right direction swiftly. It took us a long time to get here, so it’s gonna take us a long time to get out of this. It’s creating the perfect storm of trying to fix a problem on this side while allowing certain problems on the other. And right now mortgage rates are in for some continued pain in the weeks and months ahead, because they’re on the side of things that are semi-sacrificed while we battle the inflation headwinds.

As we near the end of summer and turn our focus into the fall, housing data and statistics aren’t historically on the side of a super strong real estate market in the months coming up. In fact, one recent report from Altos research revealed that available inventory in 2023 is the second worst it’s been in the last 6 years, only second place to 2021, when most of the nation was still hunkered down trying to avoid moving by all means necessary. So this chart of available inventory signals that we are in for fewer existing homes hitting the market this fall, which then means values are most likely to stick right where they’re at. And with no substantial mortgage rate correction to the downside, it could be choppy waters for some communities. Buyers who are serious will still be able to find a desirable place, but it will be their persistence and grit that gets them into a home, not just their qualifications.

Remember the Philly Fed Manufacturing Index I told you about last week and how it could come in with its 12th consecutive month in the negative?  Well to most people’s surprise it came in with a positive +12 reading, which was nice to see. Not only did it break it’s 11-month streak in the negative, but the distance from the previous months reading of -13.5 to +12 marks a pretty health resurgence. But wait, you know what surprised on the ugly end of the news last week? The Empire State Manufacturing index, which missed by a Lot! It missed BIG TIME! The expectation was -0.9 reading, and it was -19. So now we have BOTH of these to look at to forecast the health of manufacturing as it relates to overall economic health, productivity, and GDP – which all weigh in on the data the Fed’s watching leading up to their next meeting in September.

And about those FOMC meeting minutes that came out last week. In summary, the Fed is still worried about an upside risk to inflation and that a failure for inflation to recede is possible. This goes hand in hand with the revelation that only a few fed members admit they see an end to tightening. So here we go again, all the market speculation about a Pivot, an end to the Fed raising rates, and possible rate cut by the end of 2023 are ALL out the window. By the way, if you’re new to this show, we TOLD you this. Months ago the Fed signaled on their own charts that they don’t envision rate cuts until 2024 at the earliest. So please don’t act surprised that numerous Fed members aren’t on board with what the TV market analysts are calling for…that’s just a case of the tail trying to wag the dog.

So with that, let’s take a quick look at what’s coming up in the markets this week.

Monday: There’s no data coming out

Tuesday: The BRICS Summit begins, For those of you who have had your eyes on the emergence of a new joint currency, it’s actually been underway for well over a decade, but only recently begun to get more attention as it’s making some people fear that it will make a move against the dollar even harder than it is already this early on in it’s lifespan. We also have 3 Fed members speaking ahead of the annual 3-day Jackson hole symposium that begins later this week.

Wednesday: Flash Manufacturing & Flash Servies come out, along with New Home Sales. I’m personally hoping for healthy signs out of all these reports – we could honestly use more good news as often as we can get it.

Thursday: Unemployment claims will be released, another Fed member speaks, and the 3-day Jackson Hole Symposium kicks off

Friday: 2 more Fed members speak, Revised Consumer sentiment is released, and Fed king Jerome Powell will speak about the economic outlook from the Jackson Hole Symposium.

This week is wall to wall jam packed with data the Fed needs and WE NEED to gauge the pulse of what to expect leading up to the September Fed meeting.

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!

Home prices Rebound, Equity Recovers, and Homebuilders Hesitate – WHAT IS GOING ON!?!?

There’s a lot to unpack here. The bottoming out of home prices that everyone seems to be predicting isn’t happening. While at the same time, affordability is at a 38 year low, and homebuilders are hesitating. Is this fueling corporate take overs of residential real estate and boosting asset values like Blackrock’s newly achieved $1 Trillion?

NO Clarity from Fed Members…They’re ALL GUESSING!

As we expected, last weeks inflation and housing data would be center stage as everyone anxiously awaited the results of our progress, or lack there of, against inflation. And with CPI and PPI data coming it right about where it was projected to – we learned that inflation is still healthfully in the positive. And to add insult to injury, unemployment isn’t heading up as fast as the Fed needs it to, which sets in motion another round of guess work heading through the month of August.

Look no further than that these 2 Fed members had to say last week:

Federal Reserve Bank of Philadelphia President Patrick Harker said the US central bank may be able to cease interest-rate increases, barring any surprises in the economy, though rates would need to stay at their current elevated levels for some time ß So how long will that be anyways….no timeframe means it’s not safe enough to even guess…and THAT should tell you something.

“Absent any alarming new data between now and mid-September, I believe we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work,”

Speaking elsewhere on Tuesday, Richmond Fed President Thomas Barkin argued it was too soon to say whether another rate increase at the Fed’s next meeting in September would be appropriate ß Well ya…you all said you’re gonna remain data dependent, and you DEFINITELY need more data, cause this week’s info ain’t gonna cut it.

“I’m leaning toward waiting until September to decide. We’ll get two labor reports and two inflation reports. I don’t see any reason to pre-judge. Should we be at that point where we can hold steady, we will need to be there for a while,” Harker said in his speech. “I do not foresee any likely circumstance for an immediate easing of the policy rate.”

So with that, let’s take a quick look at what’s coming up in the markets this week. We only get pertinent data on 3 days this week starting off with

Tuesday:  Core Retail Sales, Empire State Manufacturing Index, Retail sales Month over month

Wednesday: Is a really important day for mortgage and real estate when we get Building permits, housing starts, and the FOMC Meeting Minutes. We’re hoping for no big surprises here, but like we have warned before…when the Fed releases their minutes, trust that all interested parties are going to scour through those notes for ANY hints of what could be coming next. If there’s nothing tipping off what the Fed will do next, then any hype about these notes coming out will be all for naught.

Thursday: Unemployment claims comes out which everyone will be looking at since jobs data is a key factor the Fed is data dependent on, in order to make their next rate hike, or rate pause decision. And also Thursday is a report we don’t often talk about on this show, called the Philly Fed Manufacturing Index. And the reason we’re bringing it up this week is because if it brings a negative print this month, it will mark the 12th consecutive month in negative territory. You heard that right, this index has had a  negative reading EVERY MONTH since September 2022. Every month since then was projected to be negative and has been reported out as negative. This is a Survey of about 250 manufacturers in the Philadelphia Federal Reserve district and asks respondents to rate the relative level of general business conditions.  Anything above 0 indicates improving conditions, and anything below 0 indicates worsening conditions. This week’s reading is expected to be -13.5….Whiiiiiiiiich is also what last months ACTUAL reported reading was. Although this is only a microcosm of ALL manufacturing conducted in our nation…it’s an ominous sign. It may not make the top of the headlines in the news, but pay attention to what this means if this losing streak continues for even longer.  Quick historical footnote, I went back as far as I could in preparation for today’s show….and going back all the way to 2010, in the past 12.5 years there’s never been more than ­­­5 consecutive months of negative readings, which happened back in 2012…and even during the Spring & summer of 2020…the worst it got was 3 consecutive monthly negative readings….Three.

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!

Remembering Tanya & Memo’s Son Cristian – How we honor him to this day

“Cristian’s Big Heart” honors the legacy of Tanya & Memo’s son Cristian Acosta‐Flores whose life was cut tragically short on September 1, 2014 (one day shy of his 19th birthday) due to complications from an undiagnosed enlarged heart.

Sudden cardiac arrest (SCA) is the leading cause of death of student athletes and the second leading death of youth under the age of 25. It’s known as the “Silent Killer” because in a heartbeat it can take the life of someone you love. The tragedy is that SCA is detectable.

Cristian’s Big Heart aims to carry forward Cristian’s legacy by promoting education on heart health and preventing such heartbreaking incidents from affecting more families in our community.

Organizations mentioned in this episode:

Inflation in focus – THIS is the kind of week the Fed will use to decide on future rate hikes

Mortgage rates we’re on a total roller coaster last week up and down then up and up and up and down. There were a few market impacting events that happened during the week but those weren’t the main influences on the mortgage market That came with a heavy slew of jobs related data which is the very thing that Jerome Powell and the Fed have their eye on from now until their next meeting in September. Then we follow that up with this week’s upcoming economic data which will be several fed members speaking at various events, and inflation data trickled out throughout the week. So as much as I would like to say that last week could have been the most volatile we’ll see for a while, it probably won’t be, This week because this week could be just as volatile or even more volatile.

As you have heard me explain in the past when it comes to monitoring mortgage rates and its association with the 10-year yield we saw the 10-year yield breakthrough 4% and stay above 4% throughout all of last week. Inevitably this means that elevated mortgage rates will most likely stay this way until there is a dramatic turn for the better in the 10-year yield market as well as the mortgage-backed security market. Until we see that happening there is no honest way for me to advocate that lower mortgage rates are on the horizon. Therefore, if you’re looking to buy or refinance, what you see is what you get, and it will remain this way for quite some time.

And here’s a quick look at what’s coming up in the markets this week.

Monday: A couple of Fed members speak.

Tuesday: We get some wholesale inventory data what will tell us whether supply constraints are easing or worsening.

Wednesday: Crude Oil Inventories, 10-year bond auction

Thursday: CPI month over month, CPI year over year, Core CPI month over month, unemployment claims. This and Friday are going to be the MOST critical of this week…and likely the rest of this month.

Because on Friday: we get Core PPI month over month, PPI month over month, and preliminary Consumer Sentiment. So as you can see CPI and PPI data will RULE the WEEK. Hold on Tight!

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!

What an unsure Federal Reserve mean for homeowners and consumers

Jerome Powell and the Federal Reserve made their most recent rate hike decision, policy statement and answered press questions last week. Let’s talk about what we learned, what we’re still waiting to see, and how this impacts homeowners, consumers, and businesses.