💸 Inflation Report Week

Issue 103 - Good Morning and Happy Tuesday.

Well, this year is not starting as planned. Rates continue to be a menace, but the good news (kinda) is that buyers are just starting to shake off the Holiday rust and look to get pre-approved… so they don’t really know how bad rates are yet 😅.

In all seriousness, we have seen a sizable uptick in lead activity and motivated clients, which is great.

Something to think about… the low rate boom lasted from roughly March 2020 to January 2022. We are now 3 years removed from all-time low rates, so clients have acclimated.

If we can get ourselves back down to the mid to low 6’s we should be rocking and rolling. In the meantime, clients that strike now will benefit. while first-time buyers and people qualifying on the edge are second-guessing.

Personal note: It was a quiet weekend, enjoying the sunshine during the days, which has been a welcome January change. Grayson turns 9 on Wednesday, so we’re all excited about that as well.

INTEREST RATES
Rates 📢 January 14th, 2025

Rate data as of morning of publication. Unless noted otherwise, all scenarios are assuming 30 Year-Fixed mortgage, Purchase or R/T Refinance. No origination points charged, 780 FICO score, and 20% down payment. Provided for consumer education only and does not serve as a binding offer to extend lending. Payment period, interest rate, APR, and other terms subject to income, asset, and credit profile qualification. Provided courtesy of GTG Financial, Inc. NMLS 1595076. Equal housing opportunity. www.nmlsconsumeraccess.org

Rates: These rates are taking us for a ride and not a fun one.

Bottom Line: This week’s key focus is inflation:

• Producer Price Index (PPI): This measures wholesale inflation. It’s expected to rise slightly, from 3% to 3.4% annually. Don’t worry too much; PPI has less impact on the housing market than other metrics.

• Consumer Price Index (CPI): The more important metric for us. It tracks everyday price changes and is expected to rise slightly from 2.7% to 2.8% annually. The "core" CPI, which excludes volatile items like food and energy, should hold steady at 3.3%.

  • Shelter Costs: These make up a huge portion (46%) of CPI. The good news? Shelter inflation is finally cooling down, which could stabilize overall CPI.

Why it matters: If inflation steadies, interest rates could follow.

TECHNICALS
Jobs Surprise

• 🚀 Jobs Surprise: 256K jobs added in December (way above forecast), unemployment fell to 4.1%, but jobless durations hit 23.7 weeks.

• 📉 Private Sector Slowdown: Only 122K new jobs added, with wage growth cooling.

• 🧐 Job Openings Misleading: 8.1M openings, but hiring and quitting rates are dropping—signs of a cooling market.

• ❄️ Holiday Unemployment Skew: New claims fell to 201K, but 1.87M remain on benefits, showing longer unemployment spells.

💡 What It Means: Buyers may feel confident with job gains but face challenges with slower wage growth and prolonged unemployment.

🔍 What to Watch This Week

• 📊 Tuesday: Producer Price Index (PPI)
  Tracks inflation at the production level—rising PPI can signal higher costs for businesses and eventually buyers.

• 📈 Wednesday: Consumer Price Index (CPI)
  Measures inflation directly impacting consumers—critical for gauging future mortgage rate movements.

• 🛍️ Thursday: Retail Sales
  Offers insight into holiday spending strength and overall consumer confidence—key for understanding buyer readiness.

• 🏠 Thursday: Homebuilder Confidence
  A gauge of how optimistic builders feel about the housing market—strong confidence suggests stable inventory.

• 🏗️ Friday: Housing Starts & Building Permits
  These numbers show how much new housing is being built and approved—great for forecasting supply trends.

💡 Pro Tip: Stay ahead by sharing these insights with your clients—show them you're the market expert they need!