Weekly Market Update: 03/15/24
Week Ending 03/15/2024
Weekly Market Update: High Inflation Helping you navigate the market |
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High Inflation |
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The Consumer Price Index (CPI) is one of the most widely followed inflation indicators. To reduce short-term volatility and get a better sense of the underlying inflation trend, investors typically look at core CPI, which excludes the food and energy components. In February, Core CPI rose 0.4% from January, above the consensus forecast and 3.8% higher than a year ago.
Although the core CPI annual rate has fallen from a peak of 6.6% in September 2022, it is still far above the readings around 2.0% seen early in 2021, which is the stated target level of the Fed. One big reason is that shelter (housing) costs remained elevated and again were responsible for the largest portion of the increase. However, the CPI data measures shelter costs with a lag, and more timely indicators from other sources suggest that this component will slowly come down later in the year. Other categories with large monthly increases included airline fares, apparel, and auto insurance. Adding to the inflation concerns, another indicator released this week which measures costs for producers also was higher than expected. The core Producer Price Index (PPI) rose 0.3% from January, above the consensus forecast of just 0.2%. Due to the higher than expected inflation reports this week, expectations for a reduction in the federal funds rate have been pushed out until even later in the year. Investors now anticipate that the first rate cut will not take place until June or July. After posting large declines in January, consumer spending picked up in February, but by less than expected. Retail sales rose 0.6% from January, below the consensus forecast for an increase of 0.8% and the results for the prior month were revised lower as well. The strongest rebound in spending was seen in motor vehicles/parts, electronics, appliances, and building materials. Retail sales, which are not adjusted for inflation, were just 1.5% higher than a year ago, below the rate of price increases over that time frame. |
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Week Ahead |
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The next Fed meeting will take place on Wednesday. No change in rates is expected, and investors will focus on the latest forecasts from officials for monetary policy and economic activity. For economic reports, the spotlight will be on the housing sector. Housing Starts will be released on Tuesday and Existing Home Sales on Friday. | ||||||||||||
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Cross Country Mortgage would like to thank our partner, MBSQuoteline for their insightful information.
All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.
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Weekly Market Update: 03/08/24
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Weekly Market Update – 01/26/2024
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A Majority of Consumers Say It’s a Good Time To Sell Your House
If you’re a homeowner thinking about selling your house, you’re probably looking for the best time to make your move. That means you’re likely balancing a number of factors, like your changing needs, where you’ll go when you sell, and today’s mortgage rates in order to time it just right.
According to recent data, that sweet spot could already be here. The latest Home Purchase Sentiment Index (HPSI) by Fannie Mae finds that 76% of consumers believe now is a good time to sell.
The graph below shows the percentage of survey respondents who say it’s a good time to sell a house. The big dip in March and April of 2020 reflects how consumer sentiment dropped at the beginning of the pandemic as uncertainty about the health crisis grew. Since then, the percentage has grown consistently as more people feel confident it’s a good time to sell.
In fact, survey respondents think it’s an even better time to sell a house today than they did in 2019, which was a strong year for the housing market. The latest survey results indicate one of the strongest peaks in seller sentiment in nearly three years (see graph below):
What Makes Today a Good Time To Sell?
One reason so many people think it’s a good time to sell is because there are still more buyers in today’s market than there are homes for sale. That’s driving home prices up, making it a good time to sell your house.
And if you’re on the fence about whether or not to sell because you don’t know where you’ll go once you do, know that you might have more options today than in previous months. That’s because the number of homes coming onto the market has grown each month since the start of the year. When more homes come onto the market, it gives you more opportunities to find one that meets your changing needs.
Bottom Line
While the number of homes available for sale is growing and giving you more options for your move, inventory is still low overall. That could mean it’s a great time for you to sell. If you’re ready to address your changing needs and take advantage of today’s favorable conditions, let’s connect.
Is the Housing Market Correcting?
If you’re following the news, all of the headlines about conditions in the current housing market may leave you with more questions than answers. Is the boom over? Is the market crashing or correcting? Here’s what you need to know.
The housing market is moderating compared to the last two years, but what everyone needs to remember is that the past two years were record-breaking in nearly every way. Record-low mortgage rates and millennials reaching peak homebuying years led to an influx of buyer demand. At the same time, there weren’t enough homes available to purchase thanks to many years of underbuilding and sellers who held off on listing their homes due to the health crisis.
This combination led to record-high demand and record-low supply, and that wasn’t going to be sustainable for the long term. The latest data shows early signs of a shift back to the market pace seen in the years leading up to the pandemic – not a crash nor a correction. As realtor.com says:
“The housing market is at a turning point. . . . We’re starting to see signs of a new direction, . . .”
Home Showings Then and Now
The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It’s a good indication of buyer demand. Here’s a look at that data going back to 2019 (see graph below):
The 2019 numbers give a good baseline of pre-pandemic demand (shown in gray). As the graph indicates, home showings skyrocketed during the pandemic (shown in blue). And while current buyer demand has begun to moderate slightly based on the latest data (shown in green), showings are still above 2019 levels.
And since 2019 was such a strong year for the housing market, this helps show that the market isn’t crashing – it’s just at a turning point that’s moving back toward more pre-pandemic levels.
Existing Home Sales Then and Now
Headlines are also talking about how existing home sales are declining, but perspective matters. Here’s a look at existing home sales going all the way back to 2019 using data from the National Association of Realtors (NAR) (see graph below):
Again, a similar story emerges. The pandemic numbers (shown in blue) beat the more typical year of 2019 home sales (shown in gray). And according to the latest projections for 2022 (shown in green), the market is on pace to close this year with more home sales than 2019 as well.
It’s important to compare today not to the abnormal pandemic years, but to the most recent normal year to show the current housing market is still strong. First American sums it up like this:
“. . . today’s housing market looks a lot like the 2019 housing market, which was the strongest housing market in a decade at the time.”
Bottom Line
If recent headlines are generating any concerns, look at a more typical year for perspective. The current market is not a crash or correction. It’s just a turning point toward more typical, pre-pandemic levels. Let’s connect if you have any questions about our local market and what it means for you when you buy or sell this year.
Why a Real Estate Professional Is Key When Selling Your House
With today’s real estate market moving as fast as it is, working with a real estate professional is more essential than ever. They have the skills, experience, and expertise it takes to navigate the highly detailed and involved process of selling a home. That may be why the percentage of people who list their houses on their own, known as a FSBO or For Sale By Owner, has reached its lowest point since 1985 (see graph below):
Here are five reasons why selling with a real estate professional makes more sense, even in today’s hot market:
1. They Know What Buyers Want To See
Before you decide which projects and repairs to take on, connect with a real estate professional. They have first-hand experience with today’s buyers, what they expect, and what you need to do to make sure your house shows well.
If you don’t lean on their expertise, you may spend your time and money on something that isn’t essential. That’s because, in today’s low-inventory market, buyers are willing to take on more of the renovation work themselves. A survey from Freddie Mac finds that:
“. . . nearly two-in-five potential homebuyers would consider purchasing a home requiring renovations.”
A professional can help you decide what you need to tackle. It’s not canned advice you could find online – it’s recommendations specific to your house and your area.
2. They Help Maximize Your Buyer Pool
Today, the average home is getting 4.8 offers per sale according to recent data from the National Association of Realtors (NAR), and that competition is pushing prices up. While that’s promising for you as a seller, it’s important to understand your agent’s role in bringing buyers in.
Real estate professionals have an assortment of tools at their disposal, such as social media followers, agency resources, and the MLS to ensure your house is viewed by the most buyers. According to realtor.com:
“Only licensed real estate agents can list homes on the MLS, which is a one-stop online shop of sorts for getting a house seen by thousands of agents and home buyers. . . . This is certainly one of many good reasons why the majority of home sellers decide to employ the services of a listing agent rather than going it alone.”
Without access to these tools, your buyer pool is limited. And you want more buyers to view your house since buyer competition can drive your final sales price higher.
3. They Understand the Fine Print
Today, more disclosures and regulations are mandatory when selling a house. That means the number of legal documents you’ll need to juggle is growing. That’s why Investopedia says:
“One of the biggest risks of FSBO is not having the experience or expertise to navigate all of the legal and regulatory requirements that come with selling a home.”
A real estate professional knows exactly what needs to happen, what all the paperwork means, and how to work through it efficiently. They’ll help you review the documents and avoid any costly missteps that could occur if you try to handle them on your own.
4. They’re Trained Negotiators
If you sell without a professional, you’ll also be solely responsible for all the negotiations. That means you’ll have to coordinate with:
- The buyer, who wants the best deal possible
- The buyer’s agent, who will use their expertise to advocate for the buyer
- The inspection company, which works for the buyer and will almost always find concerns with the house
- The appraiser, who assesses the property’s value to protect the lender
Instead of going toe-to-toe with all these parties alone, lean on an expert. They’ll know what levers to pull, how to address everyone’s concerns, and when you may want to get a second opinion.
5. They Know How To Set the Right Price for Your House
If you sell your house on your own, you may over or undershoot your asking price. That could mean you’ll leave money on the table because you priced it too low or your house will sit on the market because you priced it too high. Pricing a house requires expertise. Investopedia explains it like this:
“. . . There is no easy or universal way to determine market value for real estate.”
Real estate professionals know the ins and outs of how to price your house accurately and competitively. To do so, they compare your house to recently sold homes in your area and factor in the current condition of your house. These factors are key to making sure it’s priced to move quickly while still getting you the highest possible final sale price.
Bottom Line
There’s a lot that goes into selling your house. Instead of tackling it alone, let’s connect so you have an expert on your side throughout the entire process.