Home Prices Surge, Job Market Shifts, and Mortgage Rate Outlook - February 12, 2024

As we delve into the economic developments of the past week, we find insights into the real estate market, employment trends, and the potential impact on mortgage rates. Here's a detailed overview of the latest headlines:

Home Prices Expected to “Extend to New Highs”

The latest data from Black Knight and CoreLogic shed light on the trajectory of home prices:

  • Black Knight's Home Price Index: Showed a 0.1% increase in home values for both November and December, with a year-over-year appreciation of 5.6% compared to December 2022.

  • CoreLogic's Home Price Index: Indicated a 0.1% decline in national home values from November to December, yet the overall appreciation for 2023 stood at 5.5%. CoreLogic forecasts a 0.2% decline in January followed by a 2.8% increase for the year ahead.

Bottom Line: Despite slight variations in monthly data, the overall trend points towards continued appreciation in home values. With forecasts suggesting further growth, real estate remains an attractive avenue for wealth creation.

The Real Story on Existing Home Inventory

The National Association of REALTORS (NAR) provided insights into the state of existing home inventory:

  • Inventory Decline: Reported a decrease from 1.13 million available homes in November to 1 million at the end of December.

  • Active Listings: Only 666,000 listings were considered active in January, indicating a significant disparity from the total reported inventory.

Bottom Line: The discrepancy between reported inventory and active listings underscores the persistent challenge of low housing supply. With demand expected to rise and supply constraints persisting, the market remains favorable for sellers.

Is a Rise in Initial Unemployment Claims Ahead?

Recent data on unemployment claims suggests potential shifts in employment trends:

  • Initial Jobless Claims: Fell by 9,000 to 218,000 in the latest week, while Continuing Claims declined by 23,000.

  • Trends and Outlook: Despite relatively low initial claims, the four-week average remains elevated, hinting at potential challenges in the job market. High-profile layoff announcements and elevated Continuing Claims further indicate potential headwinds.

Bottom Line: While the immediate impact on employment figures may seem positive, underlying trends suggest caution. The labor market dynamics could influence future mortgage rate movements.

Mortgage Rate Outlook: Expected Stability

As we look ahead to mortgage rates for the upcoming week, current trends and forecasts suggest:

  • Stability: With economic indicators pointing to a mix of positive and cautionary signals, mortgage rates are expected to remain relatively stable in the short term.

  • External Factors: However, unforeseen economic events or shifts in monetary policy could introduce volatility, influencing mortgage rate movements.

Bottom Line: While the outlook for mortgage rates leans towards stability, monitoring economic developments closely remains essential for accurate forecasts.

For further insights and analysis on economic trends and mortgage rates, consider consulting trusted sources such as the Federal Reserve, Black Knight, CoreLogic, and the National Association of REALTORS. Stay informed to make well-informed decisions in today's dynamic market environment.