Weekly Review
Newsletter - 1/3/2023
Week of December 26, 2022 in Review
After the market closures Monday for the Christmas holiday, housing news highlighted last week’s calendar:
- Are Signed Contracts on Existing Homes Set to Rebound This Year?
- Home Prices Have Softened But Annual Appreciation Is Still Strong
- Challenges Remain for Job Seekers, Data Shows
Are Signed Contracts on Existing Homes Set to Rebound This Year?
Pending Home Sales fell 4% from October to November, marking the sixth straight monthly decline. Sales were also 37.8% lower than in November of last year. This is a critical report for taking the pulse of the housing market, as it measures signed contracts on existing homes, representing around 90% of the market.
What’s the bottom line? Lawrence Yun, chief economist for the National Association of Realtors, noted, “Pending home sales recorded the second-lowest monthly reading in 20 years as interest rates.” However, he explained that there is typically a two-month lag between mortgage rates and home sales and “with mortgage rates falling throughout December, home-buying activity should inevitably rebound in the coming months and help economic growth."
Home Prices Have Softened But Annual Appreciation Is Still Strong
The Case-Shiller Home Price Index, considered the “gold standard” for appreciation, showed home prices fell 0.5% in October but were 9.2% higher compared to October of last year. This annual reading declines from the 10.7% gain reported in September.
The Federal Housing Finance Agency (FHFA) also released its House Price Index, which showed that home prices were flat from September to October but were 9.8% higher than in October last year. This is a decline from the 11% annual increase reported in September. FHFA’s report measures home price appreciation on single-family homes with conforming loan amounts, which means it most likely represents lower-priced homes. It also differs from Case-Shiller’s data, in that it does not include cash buyers or jumbo loans.
What’s the bottom line? Home prices have been softening, but Case-Siller’s 9.2% annual gain “is in the top quintile of historical performance levels,” per Craig J. Lazzara, Managing Director at S&P DJI. And while home prices are now down 3% from their peak, this is a far cry from a housing crash of 20% that some in the media are predicting.
Challenges Remain for Job Seekers, Data Shows
The number of people filing for unemployment benefits for the first time rose by 9,000 in the latest week, as 225,000 Initial Jobless Claims were reported. Continuing Claims, which measure people who continue to receive benefits after their initial claim is filed, saw another large increase of 41,000 to 1.71 million.
What’s the bottom line? Continuing Claims have now risen by 346,000 since the beginning of October, reaching their highest level since early February. This suggests it’s becoming harder for many to find a job once they’re let go.
What to Look for This Week
After the market closures Monday for the New Year holiday, labor market data will dominate this week’s calendar.
ADP’s new Employment Report will give us an update on private payrolls for December when it is released on Thursday. The latest Jobless Claims data will also be reported on Thursday while Friday brings the Bureau of Labor Statistics Jobs Report for December, which includes Non-farm Payrolls and the Unemployment Rate.
Technical Picture
Mortgage Bonds ended last week battling support at the 50-day Moving Average. If this level is broken, the next floor is at the 99.845 Fibonacci level. The 10-year tested the 3.908% Fibonacci level but was rejected. This Friday’s BLS Jobs Report could be the catalyst to spark a rally in Bonds.
Information (weekly review) was provided by Mark Hedman
Homebridge Financial Services - Sales Manager, Mortgage Loan Originator
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