Week of July 22nd, 2024 in Review

TECHNICALS
Stay On Target

Everything is lining up for that magical rate cut come September. But when we look back on this, will we realize we are in the middle of the cut right now? At least on the mortgage side of things.

📉 Inflation Readings Keep Fed on Track for September Rate Cut

June's Personal Consumption Expenditures (PCE) showed:

• Headline Inflation: Rose 0.1% from May.

• Year-over-Year Reading: Declined from 2.6% to 2.5%.

• Core PCE: Rose 0.2% monthly, holding steady at 2.6% year-over-year (lowest level in three years).

Bottom Line:
The Fed's efforts to tame inflation, with eleven rate hikes from March 2022 to July 2023, aimed to slow the economy and reduce demand. Recent data suggests the Fed might cut rates in their September 18 meeting.

🏠 Existing Home Sales Decline, Inventory Ticks Higher

June's existing home sales, according to NAR:

• Sales Decline: Down 5.4% from May and the previous year.

• Market Activity: Homes sold faster, averaging 22 days on the market.

• Above List Price: 29% of homes sold above the list price.

• Inventory: 1.32 million homes available, up 3.1% from May and 23.4% from last year.

Bottom Line:
Despite fewer sales, demand remains robust, evidenced by quicker sales and higher prices. Rising inventory is a positive step towards alleviating the tight housing supply.

🚧 New Home Sales Hit 7-Month Low

June's new home sales data:

• Sales Decline: Fell 0.6% from May, lowest since November.

• Annual Decline: 7.4% lower than June last year.

• Regional Impact: Northeast saw a nearly 64% annual decline.

• Available Homes: 476,000 new homes for sale, but only 102,000 are completed.

Bottom Line:
Despite the decline, buyers are turning to new construction due to the shortage of existing homes. However, more completed homes are needed to meet demand.

📈 Second Quarter GDP Stronger Than Forecasted

Q2 GDP data:

• Growth: 2.8%, well above the 2% estimate and double Q1's 1.4%.

• Contributors: Strong consumer spending and inventory build.

Bottom Line:
The economy performed better than expected last quarter. Note that this data could be revised in the upcoming readings on August 29 and September 26.

📉 Jobless Claims Improve but Remain Elevated

Recent jobless claims data:

• Initial Claims: 235,000 new claims.

• Continuing Claims: 1.851 million ongoing claims.

Bottom Line:
Though initial claims fell, both initial and continuing claims have trended higher, indicating increased layoffs and slower hiring.

🔍 What to Look for This Week:

Housing News:

• Appreciation Data: Case-Shiller and FHFA report for May on Tuesday.

• Pending Home Sales: June data on Wednesday.

Labor Sector Updates:

• Job Openings: Tuesday.

• Private Payrolls: Wednesday.

• Unemployment Claims: Thursday.

• Nonfarm Payrolls and Unemployment Rate: Friday.

Fed Meeting:

• Two-Day Meeting: Begins Tuesday.

• Monetary Policy Statement and Press Conference: Wednesday afternoon.