Monday Mortgage Minute – What the Fed Said, PPI, Existing Home Sales & Homebuilder Index


Last week we got more of the same from Jerome Powell. Tuesday while giving remarks about the economy and policy he reiterated the need for the Fed to remain focused on Price stability, but also made it very clear that the Fed will not become a “climate policymaker”.

No big surprises, so no big changes leading up to the February 1st Fed Rate Hike announcement.

CPI data that we kept a very close eye on came in exactly as projected. It’s not bad, but it’s also not the GREAT signal that inflation is reversing course.

And consumer sentiment was not earthshattering.

Collectively this means nothing was startling enough to shake up the markets ahead of the February Fed meeting


With that let’s get on to this week’s market outlook!

Monday is actually a bank holiday in honor of Martin Luther King Jr. day. No banks are open, and the markets are closed.

The real fireworks start Wednesday January 18th when we get all PPI data. Month over month, year over year, and CORE PPI all come out before the market opens. If these come in better than expected, then the case can be made that inflation may be tapering off, flattening, or maybe reached it’s peak.

Remember, the Producer Price Index is a lagging indicator, but a projections of future consumer expenses that end up in our Consumer Price Index. Keep an eye on all things PPI this week. Higher than expected is bad news, Lower than expected will be treated as GREAT news.

And there’s even more important news on Wednesday this week when we get the latest in retail sales…remember we just talked about consumer sentiment a minute ago? The question we’re hoping to answer is “will this retail sales number reflect that same attitude we just got in consumer sentiment or will it conflict and create confusion in the markets?”

And then really important data for us know about in mortgage and real estate is the NAHB Housing Market Index – The National Association of Homebuilders.

This monthly reading is a survey of about 900 home builders which asks respondents to rate the relative level of current and future single-family home sales. Any number above 50 is a favorable reading. But this index is getting clobbered month after month after month, falling from 83 a year ago, to 55 by July 2022, all the way down to 31 in December, just last month. So in 1 years time it plummeted from 83 to 31…an unheard of 52 point fall from grace.

Any turn around in this number would be very welcome news, but I wouldn’t be surprised if this eventually bottoms out in the low 20s or high teens….YIKES!

Thursday January 19th we get unemployment claims and boy has this one been all over the place. Not to mention there was a recent revision that delicately admitted the government over stated jobs growth by 1-million jobs, but oh well, it’s not like we’re making monetary policy around here based on actual data right?!?! (sarcastic)

And we round out the week Friday January 20th with Existing Home Sales. This is another interesting case of data because it HAS ALSO been declining month after month after month for well over a year. At one time it posted 6 consecutive months of readings of 6-million annualized sales, but most recently posted an annualized reading of 4- million in December. That was JUST last month, and it’s a 33% decline from the most recent high. This is another big black eye for the housing industry as a reflection of the overall economic impact of monetary policy that makes its way through the nation.


So what’s all this mean for mortgage rates?

The markets are going to continue to gather all the data they can leading up to the next Fed Rate hike decision and press conference February 1st. But if you need to make that next right step in mortgage and real estate in 2023, it’s imperative you get started now.

As we’ve been discussing, rates will likely hover in this range we’re in for quite some time until something obvious shifts sentiment and money in a defined direction. Until we start seeing progress made to reduce inflation, expect that elevated rates are what we’re contending with.

That being said, there’s a LOT less buyer competition in this market, and if the Home builder index is any indication, there’s not a lot of inventory coming to market anytime soon. Therefore, prices could stabilize or lightly correct vs. crash and burn. And someone else’s cold feet could be your opportunity to get in that dream house in 2023.

If you haven’t heard about the 3-1 buy down yet, that’s the focus of this weeks podcast coming out in a few days where we talk all about how people are using it today to win in the market. Take a listen and see if this is what can help you achieve your ownership goals in 2023.


Thanks again for tuning in to Monday Mortgage Minute.

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We’ll see you again next week!