⚡️ Your Market Pulse Housing & Economic Update

For the week of March 6, 2023

For the week of March 6, 2023

“Everything that’s broken was beautiful at one time. And our mistakes make us better people”—Jamie Hoang

📈 DEMAND OUTPACES SUPPLY AS ABSORPTION RATE CONTINUES RISING IN CLARK COUNTY, NV
 💸 TREASURY BONDS IN A FULL INVERSION
🤯 PENDING HOME SALES ROSE FOR SECOND STRAIGHT MONTH

We hope you enjoy the content of this weekly market pulse newsletter.  Our goal is to analyze and keep you informed on the economy and real estate market so you can make better, informed decisions. We’re here to help you with your real estate needs (residential, commercial & investments) when you’re ready. 

Call/text us at (702) 721-7332 or e-mail Jordan@DoveandAssociates.com

LOSING STREAK SNAPPED... Traders broke the stock market's weeks-long losing streak as they went for the notion that despite signs of a resilient economy, we're very close to the peak of Fed rate hikes.

Those signs included the ISM Non-Manufacturing Index showing the huge services sector of the economy still expanding, rising Q4 Productivity and Unit Labor Costs, and super low Initial Jobless Claims. 

But allaying fears of the Fed staying heavy on hikes, the Atlanta Fed President said he favors a quarter percent bump in March and that the Fed needs to go to 5.00-5.25% and then leave the rate there well into 2024.   

The week ended with the Dow UP 1.7%, to 33,391, the S&P 500 UP 1.9%, to 4,046, and the Nasdaq UP 2.6%, to 11,689.

Bonds ended the week a tick down overall, with the UMBS 5.5% unchanged, at $99.21. The national average 30-year fixed mortgage rate continued to edge up 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.   

The Pending Home Sales index of signed contracts on existing homes rose in January for the second straight month, up 8.1%, though still down from a year ago. Gains were nationwide and foretell higher sales in February and March. Month-over-month, contract signing raised in all four major U.S. regions, but pending home sales dropped in all regions compared to one year ago.

In January, spending on residential construction came in at a decent $847.4 billion annual rate, just a tick below December’s figure. This indicates more new homes will become available later this year. 

Best of all, ShowingTime’s index of home showings posted its largest monthly increase ever. Their VP of sales and industry noted, “a larger increase than any January before, after last year’s rapid cooldown, is significant.”

DID YOU KNOW… Realtor.com reports the supply of for-sale homes in February was up 67.8% versus a year ago. This was put to homes being listed for 67 days—but that’s still less time on the market than before the pandemic

• A year after the first rate hike, the Fed still has a long way to go in the fight against inflation…
  
  It was a year ago this month that the Federal Reserve launched its first rate increases in this latest cycle to bring down inflation.
  
  The rate hikes appeared to have quelled some of the inflation surge that inspired the policy tightening. But the notion that the Fed was too late to get started lingers.
  
  “They do not know more about inflation than the average consumer. That’s important,” said Quincy Krosby of LPL Financial.
  
  With inflation still well above the Fed’s 2% target, there’s growing concern in the financial markets that more interest rate hikes will be needed.
  

• Treasury yields rise slightly as investors prepare for key economic data, Fed Chair Powell comments...
  

  Investors weighed the outlook for monetary policy and the state of the U.S. economy, including inflationary developments, ahead of a series of data releases slated for the week. That includes JOLTs job openings data on Tuesday and February’s non farm payroll and unemployment report on Friday.

  The labor market is one of the key areas of the economy that the Fed has been trying to cool through policy measures such as interest rate hikes. The new figures could therefore provide hints about the impact of the central bank’s monetary policy.
  

  Before then, Fed Chairman Powell is expected to speak before Congress on Tuesday and Wednesday about the central bank’s expectations regarding inflation and what this means for its policy approach.

Percentages are a two week change.

30 Year: 3.912% -2.0bps
(Last reading: 3.932%)

10 Year: 3.981% +5.9bps
(Last reading: 3.922%)

5 Year: 4.267% +9.6bps
(Last reading: 4.171%)

2 Year: 4.892% +11.0bps
(Last reading: 4.782%)

Note: The 2 year and 10 year spread (as shown below) inverted even larger to an 91 basis point spread.  The spread increased .05 from our last the last reading on 2/27/23 as we have a again have a true inversion with these four yields.

Southern Nevada Absorption Rate
continues spiking as inventory continues
to drop and sales accelerate

Current ARF:
33.03% 🤯

The current absorption rate for the Southern Nevada market the past 30 days is 33.03%, up 2.77% (277 basis points) from the last absorption rate reading on February 27, 2023 (30.26%).

There is about 3.03 months of inventory available on the Southern Nevada housing market.  6 months of inventory is considered an even buyers & seller’s market, although we at D&A believe that 4 months is an even buyers & sellers 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.  Median prices are of 378 sold listings from the MLS as of March 6, 2023.

Currently for the month of February 2023

Single Family
$432,990
+$8,000
Up from February of $424,990

Condo
$226,750
+$6,496
Up from February of $220,254

Townhomes
$345,500 
+$35,500
Up from January of $309,500

  Inventory continues to decline this week after peaking to 11,344 available properties in October '22.  Inventory is now around April 2022 levels. 

Accepted contingent offers remain elevated with 886.  Sales have also continued at higher levels then we have seen in recent months with 847 closed the past seven days which is up 40.46% compared to the month prior. 

There are currently 6,881 active single family homes, townhomes, condominiums, high-rises, manufactured and multi-families available on the market.  Available rental properties also dipped 9.10% month-over-month to 3,233 active rentals on the market. 

As of March 6, 2023, there are currently active (4w change):

• 3,976 Single Family Homes (-732) -12.82%

• 734 Condos (-25) -3.30%

• 508 Townhouses (-27) -5.05%

• 260 Manufactured Homes (-14) -5.11%

• 337 High Rise Units (-8) -2.32%

• 66 Multiple Dwellings (-2) -2.94%

• 2,480 Parcels of Land (+11) +0.44%

• 3,233 Rentals On Market (-323) -9.10%

Past Seven Days Market Watch (w/w change):

• 728 New Listings (+24) +3.41%

• 198 Back on Market (+19) +10.61%

• 80 Price Increases (+20) +33.33%

• 649 Price Decreases (-98) -13.12%

• 886 Accepted an Offer (-17) -1.88%

• 847 Sold (+244) +40.46%

• 372 Expired (+258) +226.31%

• 347 Taken Off Market (+8) +2.36%

This week, there are 253 less active residential resale properties on the market compared to the last read on February 27, 2023 for a total of 6,881 a decrease of 3.55%.

WEEKLY JOBLESS CLAIMS, MARCH JOBS… A light week for economic reports, but we’ll be watching weekly Initial Unemployment Claims, expected to stay below 200,000, and the February jobs report. Economists are forecasting a more modest gain in Nonfarm Payrolls than we saw in January. However, no one is predicting the kind of labor market slowdown the Fed wants to see. 

• If you’re thinking of selling your house, be sure to explore all the options you have for your next home.

• Both newly built homes and existing homes offer plenty of unique benefits.

• If you have questions about the options in our area, let’s discuss what’s available and what’s right for you.

  

  Forecasting Federal Reserve policy changes in coming months. The Fed Funds Futures market expects a cascade of quarter percent rate hikes—one at each of the Fed’s next three meetings. Note: In the lower chart a 100% probability of change is a 100% probability the rate will rise. Current rate is 4.50%-4.75%.

  AFTER FOMC MEETING ON:     CONSENSUS
  Mar 22                                             4.75%-5.00%
  May 3                                               5.00%-5.25%
  Jun 14                                              5.25%-5.50%

  Probability of change from current policy:

  AFTER FOMC MEETING ON:      CONSENSUS
  Mar 22                                                100.0%
  May 3                                                  100.0%
  Jun 14                                                 83.7%