The Fed’s Most Important Decision of 2023

Last week was all about inflation which we talked about. Consumer inflation came in at 3.7% which was higher than projected, and STILL really far away from the Fed’s 2% overall inflation target. Too many people on TV just fan the flames of market optimism, completely void of any recollection of economic history. In the past we’ve seen inflation weaken as an initial sign of progress, only to rear it’s ugly head again, right before deflation finally kicks in and wrecks a bunch of stuff in a lot of sectors of the economy. This is showing those same markers, but ok maybe it’s for different reasons. I agree with that. And Fine, those of you who are asking “why isn’t he talking about PCE?!?!” which is the Fed real marker for whether we’re making a dent in inflation…we’ll it’s still positive too, and until it starts reporting zeros in growth of even some negative numbers…we’re still in a month over month ascending line chart. By the way, I’m willing to bet that Fed members were probably aware of this during their Jackson Hole Symposium meeting recently. Remember a number of them hit the press stating that they’re prepared to raise rates higher if they need too, and then hold them there for longer….maybe its time we start believing what they’re telegraphing.

If anything has a chance of making the Fed pause rate hikes this week it will be softening jobs data. As we’ve been telling you, they want to see 4.5% unemployment rate – which is a combination of increasing numbers of American’s hitting the jobless line at the same time that companies are telegraphing hiring freezes, and making less new jobs available. Look no further than the most recent JOLTS report that was 700,000 LESS JOBS available than the previous month. And don’t even get me started on the hundreds of thousands of combined tech layoffs that have happened this year. Maybe you even forgot about all that because they have drifted off into the furthest recesses of the news headlines and collective attention span. And while weakening unemployment is bad for the economy, it’s actually good for the Fed…which somehow is also good for the economy…but on a much longer timeframe than we’ll probably be comfortable with. September 20 will either be a HUGE day for the Fed or a massive disappointment that forces everyone’s attention on their November meeting. If they need to take more action, I’d honestly like to see them do it now RATHER than whack the economy one more time in November right before the holiday shopping season.

At this point opportunities in the real estate market need to be looked at the MICRO level, meaning YOUR specific scenario and what will help YOU advance your real estate and mortgage goals. Yes, we know that certain market conditions like lower rates, reduced home prices, and more inventory will help more people, but you know what?…THIS is the time where maybe you have to compete against YOU. What does your life circumstances call for? Is renting STILL in your future? What are you capable of doing that can help you increase your income, decrease your debt, and raise your credit score. Let’s start digging in and going after our personal financial goals like they mean something and go hit those goals!

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

Tuesday: Building Permits and Housing Starts. Both of these are critically important to real estate and mortgage. We need more inventory any way we can get it. And with existing home sales really coming up short this year, our hopes for more buyer options in housing in 2024 will come from these batches of data. Hey Builders – we’re watching and hoping you step to the plate with more homes in the new year!

Wednesday:  Is the biggest day of the week, Month, and maybe even the year. Jerome Powell will announce the Federal Reserve Interest Rate decision, give his prepared remarks, and hold a press conference. Will they hike or will they pause? If they hike, what will they tell us about that decision? If they Pause, can they tell us that we’re finished or not?

Thursday: Unemployment Claims, Philly Fed Manufacturing Index, Existing Home Sales will be released.  Mostly par for the course here, but keep an eye open for any surprises.

Friday: Flash Manufacturing PMI and Flash Services PMI both come out.

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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Home Prices Flattened While Mortgage Rates Peaked, but Are They Related?

Recent reports and research reveal we’re experiencing some anomalies in housing and real estate. So today we talked about these recent hot topics to try and make sense of everything that changing:

  • Mortgage payments increased 17% annually to $2,162 in July 2023
  • Did we reach the peak for mortgage rates this year?
  • US CoreLogic S&P Case-Shiller Index Was Even Year Over Year in June, Signaling a Market Shift
  • Single-family construction slows across the country in Q2

Rate Hike or Rate Pause – All Eyes on Inflation and the Fed

Mortgage Rates last week were pretty ugly coming off the 3 day weekend. The bond market and mortgage-backed security investors continue to gauge where the puck is going next when it comes to the fed and their monetary policy. The housing industry is strapped with historic unaffordability, the highest mortgage rates in 23 years, waning resale inventory and shallow new build inventory coming to the market. Some of this is seasonally expected in areas where in-climate weather puts a damper on home sales, but these trends are troublesome for sunshine states due to their economics, not just the weather. Towards the end of the week things evened out, but overall, mortgage applications are generally in decline year over year substantially, which then adds other pressures in the real estate system we have yet to deal with.

The Federal Reserve really has their work cut out for themselves this month. Everyone, I MEAN EVERYONE that’s connected to financial markets, mortgage and real estate is paying very close attention to every word spoken by fed members leading up to next weeks meeting, not to mention the data that shows whether we are in line with fed expectations or not. Which in turn, will determine whether we see them pause or hike rates again this month. Despite there being bold confidence from both the rate hike and rate pause camps, this could actually turn out to be a toss up, where they could  kick the can down the road and yet again delay any such decision until their final meeting of the year on November 1st. What will they do?….

So when is enough enough? We’re 18 months into the current Fed tightening cycle and still hearing that there is room for more rate hikes, and that elevated rates may have to be held higher for longer in order to see the desired effects the federal reserve wants to see. Further, there’s current data references rivaling past historic black eyes to make one think they’re going steady and about to get married. Mortgage rates their highest since 2000, anyone remember the bubble? How about affordability at it’s lowest since 2008, remember the global financial collapse? And what about available inventory? Again, lowest since global financial collapse. All these comparisons are pretty nasty, but rather than getting jerked around by the comparisons, all the real pressures are in the hands of the deciders who will ultimately determine whether we’re lining up for further pain, or gain hero status by getting us outta this mess. Which do YOU think will happen?

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

Wednesday:  is all about the CPIs. Core CPI month over month, CPI month over month, CPI year over year. This will probably be one of the biggest data releases in recent history because the Fed has pegged this piece as critical to their rate hike or rate pause decision. Not to be outdone,

Thursday: Core PPI month over month, core retail sales month over month, PPI month over month

Retail sales month over month, unemployment claims. As for all the “month over month” readings, these are all going to be critical to show the Fed momentum for the better or worse which will let them know whether they should pause or hike rates at next week’s meeting. Coupled with the previous days CPI data, these will likely be the determining factors…And I’m guessing they already know this prior to it’s release….and probably already know what they’re gonna do during their rate announcement Wednesday September20th.

Friday: Empire State Manufacturing Index, Preliminary Consumer Sentiment reading both come out and will play second fiddle to all the inflation data we’re getting. BUT let’s not overlook the impact of what these two reading actually mean in the function of the overall health of the economy as they measure two different parts of the economy, but do have connection points between business and consumer relationship of consumables and spending health.

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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The Future for Mortgage Rates and Home Sales

Look, there’s no easy way to address all these market conditions happening right now, so we’re tackling them head on!

1. New Listings Take a Hit, possibly due to higher mortgage rates. So Where are Mortgage Rates Headed?

2. New Home Sales Grow, even with Higher Rates, can this sustain?

3. Home sales will be weak in 2024 regardless of “soft landing” per Fannie Mae.

4. Jerome Powell says the Housing sector is showing signs of picking back up.

Tough Economic Realities & 3 Things You Need to Know About the Fed

Last week mortgage rates got a touch better and eased up but not by anything we’d be shouting from the mountaintops about. Literally some people went from 7.5% to 7.3875% and others went from 7.3875%….to 7.25%. So not huge moves, but right now in an elevated rate market every little bit helps. This will be a short week and hardly any market shattering data coming out, it could be calm seas…Although I’ve said that before and been surprised by some Darkhorse item, ya know like multiple bank failures, or the systemic risks of the largest Chinese developer rapidly careening towards a huge problem causing ripple effects throughout intertwined markets, or a leaked Federal Reserve document that lists 7 midsize US banks they’re concerned will have solvency issues, that by the way, THE FED is directly responsible for. I mean, other than that…everything should be fine. It’s fine.

Last week was pretty rough when it came to economic data. Not only was there a huge miss in employment change, but Job openings missed by 660,000, GDP came in lower than projected, and unemployment edged up, but not as much as the Fed needs it to. Unemployment was 3.8% and remember they need it at 4.5% by the end of the year to hit their estimate of what it takes to slow down spending. Clearly at this point, the Fed’s work is far from over, we’re gonna have to wait longer for all the lagging effects of rate tightening to work their way through all parts of the economy. Which then means September becomes a VERY VERY important month and even more critical Fed meeting and press conference because the data isn’t leaning in their favor.

So will they hike rates or pause rates? This is the question everyone will be asking for the next 3 weeks leading up to the Fed Meeting Wednesday September 20th. On one hand we have people arguing that the Fed should clearly pause because we are starting to see some data move in the direction that they have claimed they need to see, even though it may not be at the speed at which the data should be moving. This argument maintains that we will eventually hit identified targets and that there need not be any further rate hikes in order to achieve it. On the other side, arguments for raising rates again are more speed related because of the slow lagging effect that is taking a very long time to achieve stated goals and the Fed’s concern that elevated rates for too long a period of time could cause longer lasting negative effects than would the short-term effects of even more rate hikes.


And here’s 3 reasons why we have a real problem on our hands with the Fed.

  • The Fed did not think that it would take this long to achieve their goal of returning inflation to 2%. Their public charts might say otherwise, but their language indicates they underestimated how long this would take.
  • The Fed has had to raise rates higher and hold them for longer and we are still not yet even in the ballpark of where they want inflation to be. It’s September 2023 – 18 months past the initial rate hikes of March 2022. Getting THIS far has taken THIS long, and there’s no reason to suspect that the end is just around the corner.
  • We have not yet hit their unemployment target of 4.5% that they say is required in order to achieve the price stability and inflation targets laid out in their projections. There’s 4 full months left to achieve that AND THEN we still have to wait for the lagging effect to hit the economic data. Thus 2024 is shaping up to be an even more critical year for our economy than what we thought 2023 was going to be.

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

Overall, this will be a very light week with the majority of the focus being on FED members. We will have 7 fed members all making speeches at various economic conferences in the 48 hour period from Wednesday afternoon through Friday morning. This is what interested ears will be listening to this coming week especially leading up to the next Fed meeting, Rate Decision, and Press conference on September 20th.

Monday: Is Labor day, all banks are closed and no economic data will be released.

Wednesday:  ISM Services PMI comes out.

Thursday: Unemployment Claims will be released.

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!

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.

We’ll see you again next week!

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?