💸 Sales Drying Up

Issue 80 - Happy Monday.

The vacation was a success. It was more of a “family trip,” if you know what I mean…

We are certainly in the midst of Summer. 🇺🇸 July 4th is right around the corner, and the weather has kicked it up a notch.

Business is busy, and rates have decided to follow the trend of the last two years and lose their minds at a super inopportune time. Perfect.

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So far, loving it. Better tools, resources, formatting, AND it’s about $100 a month, CHEAPER! On top of that, each issue will be hosted on a website and easily accessible later.

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🪖See you in the trenches

PERSONAL
Monterey Family Trip

From Monday through Friday, we escaped the heat and went to Monterey.

Beach days, bike tours of 17-mile drive, the aquarium (of course), wine tasting, and rail car rides. Action-packed week. The kids did great and had a blast.

I was shocked at how expensive it was to eat places… but then I realized we were smack dab in the tourist section of Cannery Row.

All in all, great little getaway. It's not super far, but just far enough. It sure seemed to spur short-term business movement, too. There is something about going on a trip that does that every time!

INTEREST RATES
Rates 📢 July 1st, 2024

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

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TECHNICALS
Sales Slip, But Prices Up

🍳 I have a little egg on my face… last week, and in a prior issue of GTG Weekly, I was confident about a super small decline in sales and, previously, new home sales ripping. Yeah, I was wrong about that, lol.

Turns out that month-over-month and year-over-year stats are showing bigger drops (see below). My bad.

We can all agree on the following equation without much certainty of the answer:

Weak sales ⟹ Low inventory & High prices ⟹ High interest rates ⟹ Inflation control.

Following this logic, since inflation is coming under control (at least on paper; the real world is way different), what will happen with inventory when the Fed brings down the rates?

We all hope it will increase, but at what pace, and what will this mean for value?

Lastly, you’ll see lenders everywhere beat the hell out of this dead horse when the time comes: “Fed funds rates are NOT mortgage rates.” But, in all reality, we know when they cut their short-term rate, it will have an immediate impact on the bond markets for our long-term rates.

📉 Inflation Cools in May

Key Highlights:

• May’s Personal Consumption Expenditures (PCE) showed headline inflation unchanged from April, but the year-over-year reading declined from 2.7% to 2.6%.

• Core PCE, which excludes food and energy prices, also decreased from 2.8% to 2.6% annually.

Bottom Line: The Fed's efforts to control inflation seem to be working as both headline and core inflation showed a slight decrease. This cooling inflation is positive for the economy, hinting at potential stabilization without the need for immediate further rate hikes.

🏡 New Home Sales Slip

Key Highlights:

• New Home Sales fell 11.3% from April to May and were 16.5% lower than May of last year.

• Despite the decline, demand for new construction remains robust due to the limited supply of existing homes.

Bottom Line: The dip in new home sales might seem concerning, but it's largely due to the limited availability of completed homes ready for occupancy. Builders are responding by constructing more affordable housing to meet demand.

🔄 Pending Home Sales Continue Lower

Key Highlights:

• Pending Home Sales dropped 2.1% from April to May, following a 7.5% decline from March to April.

• Sales were 6.6% lower than a year earlier.

Bottom Line: The decrease in pending home sales indicates a slower market for existing homes. However, forecasts suggest that the second half of 2024 will see moderately lower mortgage rates, higher sales, and stable home prices.

📈 Home Price Gains Remain Strong

Key Highlights:

• Case-Shiller Home Price Index showed a 0.3% rise in home prices from March to April, with a 6.3% annual increase.

• FHFA House Price Index reported a 0.2% rise in home prices from March to April and a 6.3% annual increase.

Bottom Line: Home prices continue to rise, maintaining strong appreciation rates. This trend underscores the long-term value of homeownership as a means of wealth creation.

📉 First Quarter GDP Slightly Higher Than Initially Reported

Key Highlights:

• The U.S. economy grew by 1.4% in the first quarter, slightly above the initial estimate but lower than the previous quarter's growth of 3.4%.

Bottom Line: A slower GDP growth rate indicates caution, but it reflects a necessary economic adjustment following significant gains in late 2023.

🏢 Initial Jobless Claims Decline but Remain Elevated

Key Highlights:

• Initial Jobless Claims fell by 6,000, with 233,000 new claims filed.

• Continuing Claims increased by 18,000, indicating a still elevated level of ongoing unemployment benefits.

Bottom Line: While jobless claims declined slightly, the overall high levels suggest a slower hiring pace. The Fed will monitor these trends closely as they consider future rate decisions.

🔍 What to Look for This Week

• Tuesday: CoreLogic home appreciation data.

• Wednesday: Job openings and private payrolls.

• Friday: Nonfarm payrolls and the unemployment rate.

Note: Markets will close early on Wednesday and remain closed on Thursday for the July 4 holiday.