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| “The only normal people are the ones you don’t know very well.”—Alfred Adler, Austrian medical doctor and psychotherapist |
| Spending on residential construction in November grew a solid 1.1% above October, and 3.7% ahead of last year. Best of all, the emphasis was on single-family homes, where spending is up 5.5% the past year. 10,000 people a day are turning 65, fueling a “silver tsunami” in the housing market. The AARP estimates that among people over 50 (74% of homeowners), 51% of them have downsized their homes. In 2023, new homes accounted for about 30% of total housing inventory and sales—more than twice the normal annual level. Industry experts feel new home sales are near their peak as a share of the total housing market. |
| STOCKS TAKE A BREATHER… Stocks snapped their nine-week winning streak, as traders worried that a better-than-expected December jobs report could mean the Fed would do fewer rate cuts than expected this year. In addition, minutes from the Fed’s December meet revealed the central bankers feel the rate is likely at or near its peak, yet they aren’t divorcing themselves entirely from the idea that they might still have to raise rates again. But the economy is slowing. ISM Manufacturing showed the sector contracting for the fourteenth month in a row. The ISM Services index had that far larger sector expanding, though at a markedly slower pace. The week ended with the Dow down 0.6%, to 37,466; the S&P 500 down 1.5%, to 4,697; and the Nasdaq down 3.2%, to 14,524. Bonds also took a dive in the new year, the 30-Year UMBS 5.5% falling 0.88, to $99.28. After nine weeks of declines, the national average 30-year fixed mortgage rate held steady in Freddie Mac’s Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information. DID YOU KNOW… ICE Mortgage Technology reports that in November, it took 35.9% of the median household income for the principal and interest payment on a median-priced home, down from 40.3% less than two months earlier. |
| MORTGAGE APPLICATIONS, INFLATION, JOBLESS CLAIMS… We’ll check if the MBA Mortgage Applications Index shows some growth in purchase loans in the new year. The big inflation read this week will be the Consumer Price Index (CPI), expected to show a small monthly increase. Initial Unemployment Claims are forecast up slightly, though still well below recession levels. The stock and bond markets will be closed next Monday, January 15, for Martin Luther King Jr. Day. |
| Forecasting Federal Reserve policy changes in coming months. Most Fed watchers still think the central bank will hold the rate in January, cut a quarter percent in March, and another quarter percent in May. Note: In the lower chart, a 4.7% probability of change is a 95.3% probability the rate will stay the same. Current rate is 5.25%-5.50%. AFTER FOMC MEETING ON: CONSENSUS Jan 31 5.25%-5.50% Mar 20 5.00%-5.25% May 1 4.75%-5.00% Probability of change from current policy: AFTER FOMC MEETING ON: CONSENSUS Jan 31 4.7% Mar 20 65.7% May 1 53.0% |
| Four straightforward keys to success: don’t make assumptions; be true to your word; don’t take anything personally; and always do your best. |
The Jim Passi Team at Citywide Home Loans proudly serves Illinois, Wisconsin, Michigan, Indiana, Georgia and Flordia. If you are looking to buy a home or refinance, we have you covered. Apply Now to get started.
