Housing Market & Economic Update
For the week of January 9, 2023
“Money doesn’t solve all problems but it could solve my money problem.”—Anonymous
After spending 10 minutes watching he market pulse,
you will know more about the real estate market and economy
than 90% of your peers. Watch the update on video below:
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NATIONAL MARKET UPDATE
Construction Spending on residential projects in November was a tick below October’s annual rate but 5.3% higher than a year ago. The slowdown was in single-families. Multifamilies were up 2.4% for the month.
Freddie Mac: “inflationary pressures are easing and should lead to lower mortgage rates in 2023.” Then, “a strong job market and a large demographic tailwind of Millennial renters will provide support to the purchase market.”
Zillow reports that, with conforming loan limits going up to $1,089,300 in high-cost counties, more than 2 million homes nationwide no longer need jumbo financing, which often comes with higher credit criteria and fees.
NEW CONFORMING & FHA LOAN LIMITS FOR 2023:
DID YOU KNOW… From 1971 to 2022, the average rate for a 30-year fixed mortgage was just under 8%. Today’s rates are significantly below that long-term average. It's also worth noting that inventory is now 58% ahead of a year ago.
END-OF-YEAR HOUSING MARKET REPORT, GET IT FREE NOW:
ECONOMIC NOTES
Job openings hold strong despite rate hikes; manufacturing in contraction… The Job Openings and Labor Turnover Survey for the month of November showed available positions at 10.46 million, down just fractionally from October’s total land above the 10 million forecast by FactSet. Job openings remained at 6.4% (as a share of the labor force) indicating demand for workers is still high despite the Fed’s efforts to cool the economy and bring down inflation, which has been driven partially by rising wages.
A separate data point Wednesday showed that the U.S. manufacturing sector contracted for the second consecutive month. The ISM Manufacturing Index for December came in at 48.4%, representing the percentage of companies showing expansion. That was about in line with the 48.5% estimate from Dow Jones. A reading below 50% indicates contraction.The U.S. unemployment rate declined overall in December, but rose for Black women and Hispanic men, according to the latest nonfarm payrolls report.
Black women saw unemployment increased to 5.5% last month, up 0.3 percentage points from 5.2% in November, data from the Labor Department showed Friday. Overall, Black employment held steady at 5.7%, while the unemployment rate for Black men actually declined to 5.1% from 5.4% last month.
Meanwhile, Latino men saw unemployment rise to 4% in December, an increase of 0.4 percentage points from 3.6% the prior month. The overall unemployment rate ticked up to 4.1% from 4.0%. Unemployment among Latino women also ticked up to 3.7% from 3.6%.
Those figures bucked the trend in the broader economy, which showed unemployment in the U.S. fall to 3.5% from 3.7%. It was 0.2 percentage points below consensus expectations from the Dow Jones.
TREASURY BOND YIELDS WATCH
30 Year: 3.643% +0.7bps
(Last reading: 3.636%)
10 Year: 3.508% -8.2bps
(Last reading: 3.59%)
5 Year: 3.643% -7.6bps
(Last reading: 3.719%)
2 Year: 4.187% -7.7bps
(Last reading: 4.264%)
Note: The 2 year and 10 year spread (as shown below) is currently at a 68.0 basis point spread and it has flattened out in this range over the past couple weeks. It is still considered a large spread indicating a future recession
SOUTHERN NEVADA MARKET UPDATE
With 2022 in the books, we had a historic year in Southern Nevada residential real estate. The market shifted from the hottest seller’s market on record to a buyer’s market in a matter of a couple of months. High prices coupled with the increased cost of borrowing money, and a sharp increase in available inventory caused this shift. Rates appear to be stabilizing in the 6%'s, and we are seeing more buyer activity returning to the market in early 2023 as home sellers and home builders alike are offering incentives and concessions to lower interest rates for buyers, sparking more demand.
ABSORPTION RATE
Southern Nevada Absorption Rate
surpasses 20% again due to steep
decrease in inventory.
Current ARF:
20.69%
The current absorption rate for the Southern Nevada market the past 30 days is 20.69%, up 73 basis points (0.73%) from the last absorption rate reading on December 12, 2022 (19.96%).
There is about 4.83 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.
MEDIAN HOUSING PRICES
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 354 closed listings on the MLS (as of Mon. Jan. 9, 2023)
Currently for the month of December 2022
Single Family
$405,000
-$20,000
Down from December of $425,000
November median Single Family:
Condo
$225,000
+$13,556
Up from December of $211,444
Townhomes
$333,000
+$13,000
Up from December of $320,000
HOUSING STATISTICS
Resale inventory continues to decline after peaking to 11,344 available properties in October '22. However, rentals are increasing and rental prices are coming down due to some sellers becoming “accidental landlords.” Historically, winter is a slow selling season of properties and it will be interesting to follow the trend as we move into the Spring 2023 selling season.
There are currently 8,665 active single family homes, townhomes, condominiums, high-rises, manufactured and multi-families available on the market.
As of January 9, 2022, there are currently active:
6,484 Single Family Homes
854 Condos
615 Townhouses
295 Manufactured Homes
339 High Rise Units
78 Multiple Dwellings
2,520 Parcels of Land
3,861 Rentals On Market
Past Seven Days Market Watch:
759 New Listings
177 Back on Market
882 Price Increases
87 Price Decreases
538 Accepted an Offer
345 Sold
195 Expired
424 Taken Off Market
This week, there are 978 less active residential resale properties on the market compared to the last read on December 19, 2022 for a total of 8,665 (-978), a decrease of 10.14%.
THIS WEEK’S PREDICTIONS
INFLATION, JOBLESS CLAIMS, CONSUMER SENTIMENT… Economists predict we'll see signs of inflation leveling off, with the December Consumer Price Index (CPI) holding flat, though Core CPI (excluding volatile food and energy prices) may be up just a tad. Initial Unemployment Claims should rise a bit, along with University of Michigan Consumer Sentiment
REAL ESTATE TIP OF THE WEEK
If you’re planning to buy a home in 2023, here are a few things to focus on.
Work on your credit and save for a down payment. If saving feels like a challenge, there’s help available. Then, get pre-approved, create a list of desired features, and prioritize them.
Let’s connect so you have expert advice on how to reach your homebuying goals this year.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months. Wall Street is now solidly behind the idea the Fed will keep a lighter foot on the gas, hiking rates just a quarter percent the next two meetings, then holding in May. Note: In the lower chart a 100.0% probability of change is a 100.0% 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 1 100.0%
Mar 22 85.9%
May 3 90.8%
With gratitude,
Jordan C. Dove, ABR® SFR®
MANAGING PRINCIPAL | REALTOR®
Dove & Associates Powered by Nationwide Realty
702.767.5557 | Jordan@DoveandAssociates.com
JordanDove.com | DoveandAssociates.com
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3960 E. Patrick Ln. Ste. 204
Las Vegas, NV 89120
NV Lic. # S.0180594