DOOM off for Real Estate & Economy? Plus, REALTOR MASS EXODUS
Market Pulse Update for the week of January 30, 2023
Happy Monday!
January is ALMOST OVER, can you believe it?
Watch the market pulse update over the YouTube Channel:
LAST WEEK’S REVIEW
MARKET RALLIES... After the prior week's losses, traders put their rally caps back on and sent the three major stock indexes up strongly on signs the Fed is curbing inflation without a big boost in unemployment.
The PCE Price index, the Fed's favorite measure, showed inflation moderated from November's 5.5% read to 5.0% in December. Meanwhile, initial weekly jobless claims fell by 6,000, to 186,000.
In addition, the economy grew at a 2.9% annual rate in Q4, there were some strong quarterly corporate results, and Durable Goods Orders and University of Michigan Consumer Sentiment came in better-than-expected.
The week ended with the Dow UP 1.8%, to 33,978; the S&P 500 UP 2.5%, to 4,071; and the Nasdaq UP 4.3%, to 11,622.
Bond prices ended flat overall, but the UMBS 5.5% rose .05, to $101.16. Freddie Mac's Primary Mortgage Market Survey showed the national average 30-year fixed mortgage rate continued to trend down. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
NATIONAL HOUSING MARKET UPDATE
New Home Sales headed up 2.3% in December. They’re still down from a year ago but the recent trend has been positive—nationally, sales activity has been rising for the past three months in a row.
Sales of new single‐family houses in December 2022 were at a seasonally adjusted annual rate of 616,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.3 percent (±18.5 percent)* above the revised November rate of 602,000, but is 26.6 percent (±13.2 percent) below the December 2021 estimate of 839,000.
An estimated 644,000 new homes were sold in 2022. This is 16.4 percent (±3.8 percent) below the 2021 figure of 771,000.
Sales Price
The median sales price of new houses sold in December 2022 was $442,100. The average sales price was $528,400.
For Sale Inventory and Months’ Supply
The seasonally‐adjusted estimate of new houses for sale at the end of December was 461,000. This represents a supply of 9.0 months at the current sales rate.
More good news: the supply of completed homes has risen rapidly. There is now a 9.0 months’ national supply of new homes for sale, a significant increase from the 3.3 months’ supply early in the pandemic.
Also encouraging, the Pending Home Sales index of signed contracts on existing homes rose for the first time since last May. The NAR observed, “recent declines in rates are clearly helping to stabilize the market.”
Pending home sales improved for the first time since May, up 2.5% from November.
Month-over-month, contract signings fell in the Northeast and Midwest but climbed in the South and West.
Pending sales declined in all regions compared to one year ago.
Active agents in Miami drop 35% in a year, as market cools… The report found Miami had 4,529 active agents as of the fourth quarter, down 2,580 year-over-year. Moreover, Inman reports 250K agents nationally could leave the industry in 2023. The National Association of REALTORS total membership at months-end December 2022 is 1,580,971.
DID YOU KNOW… New Home Sales and Pending Home Sales are timelier indicators of where real estate is heading because they’re calculated when contracts are signed. So, it was good news that both trended up in December.
ECONOMIC NOTES
Smaller rate increase by Federal Reserve likely as inflation cools… America’s central bank is expected to raise rates by a quarter point on Wednesday. The question now is what comes next. Investors will be watching the Fed chair Jerome H. Powell on Wednesday to see whether he emphasizes progress toward lower inflation or focuses on how much more work there is to do. (NY Times)
U.S. GDP rose 2.9% in the fourth quarter, more than expected even as recession fears loom
Gross domestic product rose at a 2.9% annualized pace in the fourth quarter, slightly better than expected.
Consumer spending weakened from the previous period but remained positive.
A sharp slide in housing helped pull down GDP, while boosts in government spending and private investment aided growth.
Jobless claims fell last week while durable goods orders increased sharply in December, but mainly due to demand for aircraft.Key Fed inflation measure eased in December while consumer spending also declined…
Core PCE inflation, the Fed’s preferred measure, rose 4.4% from a year ago, its smallest annual increase since October 2021.
Consumer spending, however, dropped 0.2%, pointing to an economy that was grinding to a halt as 2022 closed.
Personal income increased 0.2% for the month, as expected
30 Year: 3.654% -3.2bps
(Last reading: 3.686%)
10 Year: 3.546% +2.5bps
(Last reading: 3.521%)
5 Year: 3.674% +5.2bps
(Last reading: 3.622%)
2 Year: 4.253% +1.1bps
(Last reading: 4.232%)
Note: The 2 year and 10 year spread (as shown below) is still inverted at a 71 basis point spread. This is unchanged form last week as the 10 year and the 2 year both rose fractionally week over week.
Southern Nevada Absorption Rate
dips below 19% due to decreasing
resale inventory & steady sales.
Current ARF:
18.90%
The current absorption rate for the Southern Nevada market the past 30 days is 18.90%, down 52 basis points (0.52%) from the last absorption rate reading on January 23, 2023 (19.42%).
There is about 5.15 months of inventory available on the Southern Nevada housing market. 6 months of inventory is considered an even buyers & seller’s market.
A market with an absorption rate at or above 20% is typically called a seller’s market, whereas an absorption rate below 15% signals a buyer’s market.
Each week we will update the current median price for the current month. Keep in mind the majority of sales occur at the end of the month, so official numbers will be published on the first Monday of each month. Current median prices are calculated from 1,079 closed listings on the MLS (as of Mon. Jan. 30, 23)
Currently for the month of January 2023
Single Family
$425,000
UNCH
Unchanged from December of $425,000
Condo
$215,000
+$3,556
Up from December of $211,444
Townhomes
$323,995
+$3,995
Up from December of $320,000
Resale inventory declines again, although fractionally this reading after peaking to 11,344 available properties in October '22. However, accepted (contingent) offers on properties have risen the last several weeks as mortgage rates have dipped to September, 2022 levels.
There are currently 8,248 active single family homes, townhomes, condominiums, high-rises, manufactured and multi-families available on the market. Rentals also dipped 2.63% down to 3,587 active rentals on the market.
As of January 30, 2022, there are currently active (w/w change):
6,010 Single Family Homes (-180) -2.91%
810 Condos (-33) -3.91%
571 Townhouses (-14) -2.39%
288 Manufactured Homes (-6) -2.04%
347 High Rise Units (+11) +3.27%
82 Multiple Dwellings (+4) +5.13%
2,517 Parcels of Land (+4) +0.16%
3,587 Rentals On Market (-97) -5.79%
Past Seven Days Market Watch (w/w change):
725 New Listings (-42) -5.79%
173 Back on Market (-13) -7.51%
44 Price Increases (+14) +31.82%
883 Price Decreases (-41) -4.64%
840 Accepted an Offer (+35) +4.17%
415 Sold (+10) +2.41%
157 Expired (-28) -17.83%
341 Taken Off Market (-1) -0.29%
This week, there are 79 less active residential resale properties on the market compared to the last read on January 23, 2023 for a total of 8,248 (-78) a decrease of 0.78%.
CONSTRUCTION SPENDING, MANUFACTURING, SERVICES, JOBS, THE FED... December Construction Spending is expected to come in flat. The ISM Manufacturing Index is forecast to show contraction, but ISM Non-Manufacturing may reveal expansion. There should be modest gains in Nonfarm Payrolls, Average Hourly Earnings, and the Unemployment Rate. We'll also get the Fed's FOMC Rate Decision, projected to be a quarter percent hike.
If you’re thinking of buying a home this year, be sure to factor in the long-term benefits of homeownership.
On average, nationwide, home prices appreciated by 288.7%over the last 32 years. That means homeowners grow their net worth significantly in the long term.
Homeownership wins over time. Let’s connect so you can start your homebuying journey today.
Forecasting Federal Reserve policy changes in coming months. The futures market expects the Fed will vote for a quarter percent rate hike this week and in March, then nothing in May. Note: In the lower chart a 99.9% probability of change is a 99.9% probability the rate will rise. Current rate is 4.25%-4.50%.
AFTER FOMC MEETING ON: CONSENSUS
Feb 1 4.50%-4.75%
Mar 22 4.75%-5.00%
May 3 4.75%-5.00%
Probability of change from current policy:
AFTER FOMC MEETING ON: CONSENSUS
Feb 1 99.9%
Mar 22 85.5%
May 3 91.3%