Mortgage Update - April 8th, 2024
Good morning, team! Who’s ready for the eclipse ☀😎
You might need your eclipse glasses because this week’s newsletter is shining bright with all the latest and greatest news in the mortgage and housing industry.
We are posting regular content to Instagram (Nick | Kreg) and Facebook (Nick | Kreg) to help you and your buyers stay informed. Be sure to follow us!
Read time: ~4 minutes
The Surprising Detail in the March Jobs Report 😮
On Friday, the Bureau of Labor Statistics released the March jobs report and the headlines surprised to the upside again. The economy added 303,000 new jobs vs. a forecast of 200,000. Additionally, the unemployment rate dropped from 3.9% down to 3.8%.
We added 72k in Healthcare jobs, 71k in Government jobs and 39k in Construction jobs. Leisure and Hospitality added 49k jobs which pushes that industry back OVER pre-pandemic levels. Unfortunately, we didn’t add any manufacturing jobs.
Two surprising items were found hidden in the details of the report.
Revisions - As soon as the report was released, I jumped straight to the revisions. The February report pulled out over 300k in jobs from previous reports. The March report, shockingly, ADDED about 22k jobs to the Jan/Feb reports. It doesn’t really put a dent in the large negative revisions from previous reports, but interesting nonetheless.
Part-time vs. Full-time Jobs - 691,000 part-time jobs were added while we lost 6,000 full-time jobs in March. Zerohedge on X also pointed out that over the last year, the number of full-time jobs is DOWN 1.347 million while part-time jobs are UP by 1.888 million.
Key Takeaway: Without digging into the details of these jobs reports, you’re missing the real story. Unfortunately, markets only trade on the headlines. Big beat and reduced unemployment caused mortgage rates to pull higher on Friday. There is a bigger and bigger camp building of folks who believe we won’t see any rate cuts this year from the Fed. Who can blame them? On paper, the US economy is humming along.
Active Listings Starting to Improve 📈
According to Realtor.com, there were 694,820 active listing in March 2024. That’s 23.5% ABOVE March 2023 (562,444) and almost double the available inventory from March 2022 (354,016).
We are still below pre-pandemic levels. March 2024 was down 37.7% to March 2019 when we had 1,115,940 homes for sale.
Key Takeaway: It’s important to watch these figures month after month. As active listings start to increase as homes remain on the market for longer and longer, we might start to see home prices pull back. Conversely, if we see a quick decline in active listings, the market may be heating up again.
Grandma & Grandpa Aren’t Selling 👴👵
Redfin released data last week that indicates more than 78% of older American homeowners plan to age in their current home. Far fewer intend to move to a 55+ community, move in with family or try out assisted living facilities.
This has gigantic ramifications on a housing industry already experiencing unprecedented low levels of homes for sale.
Can we blame older Americans? They are incentivized to stay put. Most don’t have a mortgage. Those that do have much lower rates than the current market rate. Tax systems in most states make it financially beneficial for grandma and grandpa to stay put, too. Medical and technology advancements are also making this reality easier.
Key Takeaway: Keeping home supply low will drive up prices making it more and more difficult for young or first time buyers from purchasing their first home. 55+ communities and assisted living facilities aren’t currently attractive enough to push the older generation to move in.
What to Watch This Week 👀
March CPI data lands this Wednesday. That’s by far the biggest data point that the markets will be watching. HEADLINE CPI forecasted to be 3.4%, which is up from the last report of 3.2%. CORE CPI is expected to come in a little softer at 3.7% vs. a previous 3.8%.