Analyzing the Week of November 20, 2023
As we approach the Thanksgiving holiday, it's time to reflect on the key economic events and indicators that shaped the week of November 20, 2023. This week's highlights include:
Hope Ahead for ousing Inventory?
Existing Home Sales fell 4.1% from September to October, reaching a 13-year low. Sales were also 14.6% lower than they were in October of the previous year, according to the National Association of REALTORS (NAR). The housing market has been facing several challenges, including elevated mortgage rates and tight inventory. Here's what you need to know:
Inventory Constraints: Tight inventory levels have been a significant factor in the decline in home sales. There were 1.15 million homes available for sale at the end of October, down from 1.22 million a year earlier. This decrease is nearly half the levels seen in 2019. It's important to note that inventory is even scarcer than it appears, as many homes counted in existing inventory are already under contract and not truly available for purchase.
Strong Demand: Despite these inventory constraints, homes continue to sell quickly. In October, homes spent an average of just 23 days on the market, and 66% of homes sold in less than a month. This indicates that demand remains robust, particularly for starter and mid-priced homes.
Hope for Buyers: NAR's Chief Economist, Lawrence Yun, has offered a glimmer of hope for buyers. He expects housing inventory to improve as we head into the spring, potentially providing more options for those looking to purchase homes.
For potential homebuyers, keeping an eye on inventory levels and being prepared to act swiftly in a competitive market remains crucial.
Weekly Jobless Claims Decline More Than Expected
In the latest economic data, Initial Jobless Claims fell by 24,000 in the past week, with 209,000 individuals filing for unemployment benefits for the first time. This decline exceeded expectations and followed a week where first-time filings reached a three-month high. Continuing Claims, which track the number of individuals still receiving benefits after their initial claim, also fell by 22,000.
Here's the key takeaway:
Job Market Resilience: Despite some recent fluctuations, Initial Jobless Claims remain relatively low from a historical perspective. This suggests that employers are striving to retain their workforce.
Continuing Challenges: While Continuing Claims decreased in the latest week, they have risen by 182,000 since September, indicating that individuals are facing difficulties finding new employment once they are laid off.
The job market is demonstrating resilience, but there are still challenges ahead for both job seekers and employers.
What an Important Recession Indicator Is Saying
The Conference Board reported that the Leading Economic Indicators (LEI) fell by 0.8% in October, marking the nineteenth consecutive month of declines. The LEI is a key indicator that tracks the direction in which the economy is heading. When this indicator turns negative, it often signals a looming recession.
Here's the crucial information:
Historical Significance: Historically, when the LEI turns negative, it precedes a U.S. recession by an average lead time of 22 months. The last prolonged period of negative LEI reports occurred from 2007 to 2009, leading up to the Great Recession.
Economic Factors: The negative trajectory of the LEI is associated with concerns such as elevated inflation, high interest rates, and decreasing consumer spending due to the depletion of pandemic savings and mandatory student loan repayments.
While a recession is generally not favorable for the economy, one potential silver lining is the likelihood of lower interest rates during such periods.
Mortgage Rate Outlook: Expected Stability
Now, let's turn our attention to the mortgage rate outlook for this week. Amidst these economic developments, what can we expect in terms of mortgage rates?
Expected Stability: Despite the fluctuations in the job market and concerns over the Leading Economic Indicators, the outlook for this week's mortgage rates suggests stability. Here are key points to consider:
Market Dynamics: While labor market reports and the economic indicators influence overall market sentiment, their immediate impact on mortgage rates appears limited.
Economic Factors: Broader economic indicators like inflation and GDP growth will continue to play a role in shaping the mortgage rate environment. However, the current data indicates a relatively stable outlook.
Fed Policy: It's important to note that mortgage rates are not directly tied to the Federal Reserve's benchmark interest rate (Fed Funds Rate). Mortgage rates are influenced by various factors, including long-term Treasury yields and investor demand for mortgage-backed securities.
Supply and Demand: The balance between housing supply and demand, as well as the overall health of the housing market, can impact mortgage rates. However, current conditions suggest a relatively stable environment with steady demand.
For those interested in mortgage rates, it's essential to stay informed and monitor market updates from reputable sources. Additionally, consulting with mortgage lenders or financial professionals will provide the most accurate and up-to-date information specific to individual circumstances.
External Links, Resources, and References:
Mortgage News Daily: Stay updated with the latest news, analysis, and trends in the mortgage market.
Freddie Mac's Primary Mortgage Market Survey: Explore weekly mortgage rate data and historical trends from Freddie Mac.
Bankrate: Access a wide range of mortgage rate data, calculators, and educational resources.
The Federal Reserve: Visit the official website of the Federal Reserve to stay informed about monetary policy and its potential impact on mortgage rates.
Remember, mortgage rates can vary based on individual factors, including creditworthiness, loan term, and loan type. For personalized mortgage rate information, it is recommended to consult with mortgage lenders or financial professionals who can provide tailored advice based on your specific circumstances.
Disclaimer: The information provided in this analysis is for informational purposes only and should not be considered as financial or investment advice. Mortgage rates are subject to various factors and can change rapidly. It is advisable to consult with mortgage lenders or financial professionals for the most accurate and up-to-date information on mortgage rates.
