Latest / Mastering Encompass® / Rate Cuts? Market Update 3/25/24

Transcript

Rate Cuts? Market Update 3/25/24 · Mastering Encompass®

• 0:29
  Hey everybody Larry Bailey here with awesome technologies and bringing you another weekly newsletter to make sure that you know what's going on in the marketplace.
• 0:38
  This newsletter was produced on March 25th 2024 and this is to review the week of March 18th 2024.
• 0:46
  This information is brought to you as always from MBS Highway.
• 0:49
  Make sure you get over to MBSHighway.com for your subscription to get this information directly. It's also brought to you from awesome technologies.
• 0:58
  The big news from all the things is the field analyst to you.
• 1:03
  It lets you see every single setting inside of encompass, presuming you're using encompass.
• 1:11
  And lets you see things like on your reports and dashboards, DDM rules, things that you can just can't find with other solutions that are currently available on the market. I guarantee you'll be impressed when I put me to the desk. Just reach out to me using Larry at atihelps.com or feel free to find me anywhere on the internet and set up a demo appointment. There's plenty of links around to find me or knows that. So let's get into this weekly newsletter.
• 1:39
  Again, this is for the review of last week, bunch of teeth. So the Fed help help read study as anticipated with their forecasts showing that three cuts are still expected this year.
• 1:51
  Plus, if you already saw positive momentum in home sales and construction, here are the top stories. By the way, if you're listening to this on podcast replay, thank you very much. If you'd rather see the video replay so you can kind of follow along on screen head over to me.
• 2:07
  It's free to join. Everybody can join doesn't matter where you work.
• 2:10
  We do not exclude. We are an entire mortgage community.
• 2:14
  That means everyone. So head on over there and get signed up.
• 2:17
  Here's the top stories. This first one is fed, still signals three rates. It cuts in 2024.
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  Next story is existing home sales hit highest level in a year.
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  Next story is home builders feeling positive.
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  Next story is favorable February.
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  That doesn't make sense. Favourable February for housing starts.
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  Okay. Alright guys. So February is favorable for housing starts.
• 2:40
  How that? And the next story is slight decline in initial jobless claims.
• 2:45
  So let's get into the first story. The Fed still signals three rate cuts in 2024. I feel like everybody's been anticipating this.
• 2:52
  So after 11 rate heights since March of 22, the Fed once again left their benchmark federal funds rate unchanged at a range of five and a quarter to five and a half. The decision was unanimous and marks the fifth straight meeting they helped rates steady.
• 3:08
  The Fed funds rate is the interest rate for overnight borrowing.
• 3:10
  For banks it's not the same as mortgage rates and the Fed's been aggressively hiking this Fed funds rate. Um throughout this cycle to try to slow the economy. Uh and curb that runaway inflation we saw over the last few years.
• 3:22
  Bottom one game. Despite some recent inflation readings that were hotter than expected the Fed noted that three rate cuts are still expected this year.
• 3:36
  The expected cuts of between 1,500 basis points, for those that don't know what basis point is 1,100th of a percent.
• 3:44
  So basically it's a penny of a penny. Um but when you see 50 basis points that's a half percent, 100 basis points is a full percent.
• 3:51
  That's how it rolls. Um so they expect to reduce that 50 to 100 over the next uh over the course of the remainder of 2024 which is only for um like four months listen to me.
• 4:01
  It's only eight months left. So we'll see what happens.
• 4:05
  The next story is existing home sales hit highest level in a year.
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  This is great news seriously. Uh so there's an image on here.
• 4:12
  The source is from the National Association of Realtors and uh the story is existing home sales jumped 9.5% from January to February to a 4.38 million unit annualized pace reaching their highest level in a year per the National Association of Realtors AKA NAR.
• 4:29
  We'll tomorrow. This report measures the closings on existing homes in February and likely reflects people shopping for homes in December and January when rates were improved from last week. I'll tell you this is a side note.
• 4:40
  It's great like I'm truly goose bumpy over existing home sales Thank you. That means people are moving, people are selling.
• 4:47
  The gears are unsticking.
• 4:51
  I'm worried about inventory.
• 4:53
  That's not in this story but I'm just in my mind.
• 4:55
  It's all about inventory so yeah.
• 4:59
  We'll see how far this jump can go without inventory. Umm. So speaking of that, uh the per the NAR chief economist Lawrence Young inventory increased 5.9%.
• 5:13
  So sales jumped 9.5%, but inventory only jumped 5.9%.
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  There's don't. So there's somewhere. Umm.
• 5:21
  So Lawrence Young noted that quote additional housing supply is helping satisfy market demand close quote. It's good. So rising and that also by the way that also means I'm getting personal side note but also means rising inventory means there there's less pressure on prices because there's more for people to choose.
• 5:38
  So hopefully that tapers the acceleration in home price, home prices which you know again a lot of people are like oh but I want my house to appreciate it and I'm like yeah but you're not selling it who cares. It's like owning a piece of stock or or or crypto coin and the price goes from a penny to a million.
• 5:57
  If you're not selling it who cares.
• 6:00
  So can you continue with the bottom line here so rising inventory is certainly stepping the direction to help improve persistent tight housing supply we've seen across the country. This is again my point so I guess I should have read ahead.
• 6:12
  So however the 1.07 million homes available for sale at the end of February is still below the healthy levels of 2.9% month supply and that's if everybody bought every house out there would just isn't true.
• 6:23
  So Yanna added quote more supplies clearly needed to help stabilize home prices and get more Americans moving to their next residence.
• 6:30
  Oh boy it's almost like I know I'm talking about.
• 6:32
  Umm yeah. So good news, next story, home buyers feeling positive.
• 6:38
  Uhh so this is actually a really big deal. Umm in terms of American home buyer psyche. Uhh yeah it's a real thing.
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  So confidence among home builders.
• 6:47
  Oh I say home buyers. I meant to read home builders.
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  I'm so stuck in builders. So home builders feeling positive.
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  Again same conversation.
• 6:56
  You want home builders feeling positive because you want them to keep building because we need inventory to manage the demand so that prices don't keep rising. Again we're all connected in this wonderful web.
• 7:08
  So confidence among home builders broke. Uh the key break even threshold of 50 in the positive territory for the first time since July of last year.
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  Um per the national association of home builders aka NAHB.
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  They're housing market index climb 3 points at 51.
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  March which is also the fourth consecutive monthly gain.
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  Any score over 50 on its index which runs from 0 to 100 signals more builders view conditions as good versus poor.
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  All 3 index components posted gains this month with the current future sales expectations both well into expansion territory.
• 7:44
  56 for current and 62 for future so that means not only are the builders feeling better than worse but they also believe that the forecast of current sales is good and future sales is you better than good and they're judging this based upon buyer traffic which also moved higher so the bottom line here is the persistent lack previously owned homes for sale aka regular houses that aren't new construction strong buyer demand rates below last fall's peak have pushed builder confidence higher.
• 8:17
  Any HP's chair, person Carl Harris explained quote, buyer demand remains brisk and we expect more consumers to jump off the sidelines and into the marketplace if mortgage continues.
• 8:28
  A mortgage rates continue to fall later this year.
• 8:32
  Close quote. Alright, so here's uh, here's a headline I flipped. Favourable February for housing starts.
• 8:39
  So February was great for housing starts. I don't know why I just didn't say that. Housing starts show out showed a big rebound in February both single family and multifamily construction improving from January's slump.
• 8:52
  This is compared to a year ago however single family starts were up 35.2% while multifamily starts were down 35.9% this just were seeing a shift from multifamily to single family construction which is welcome news as this is where supplies needed around much of the country.
• 9:12
  Single family building permits also reached our highest level in a year up 29.5% with compared to February. January 2023 signaling that the numbers for future supplies are also favorable. We also saw big boost in completions and if the current pace continues this will add a further boost to much needed supply.
• 9:32
  Alright so the bottom line here. Here is N-H-B's assistant VP for forecasting and analysis. The Nushka Nanaskara Skillmton said that quote single-family housing is poised for a good year in 2024 with starts and permits on an upward trend.
• 9:51
  The chair of N-H-B Carl Harris added also the quote solid level of single-family production in February tracks closely with rising builder sentiment with mortgage rates continued to expect moderate further this year aka lower.
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  This will provide an added boost for single-family building close quote.
• 10:10
  We'll say it's interesting because you know over the last couple years it's all been multi-family, multi-family, multi-family because it's been geared towards rent or rent or rent or rent or rent. And now with builder switching back to single-family, umm yeah it's going to help a lot of people find homes and get these um, you've heard me talk about in the past, actually get them into their own homes. So here's the next story.
• 10:34
  There's a slight decline in initial job of slams.
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  the initial job of slams were relatively flat in the latest week with 210,000 people filing for unemployment benefits for the first time.
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  This was a decline of 2000 from the previous week.
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  Continuing claim It rose by 4,000 with 1.807 million people still receiving benefits after 5. On their initial claim.
• 10:55
  Bottom line here is that initial job was claimed to remain tame and continue to suggest a surprisingly low level of layoffs despite the high profile of the downsizing announcements we've seen.
• 11:07
  Yet continuing claims are trending higher compared than a year ago and showing that's becoming harder and harder for some people to find new employment once they're let go. Yes, it's very true. Umm, alright, family half of the week here. Baseball is back in case you didn't notice.
• 11:22
  Umm, so these baseball inspired honey roasted Peanuts courtesy of spruce eats are sure to be a home run every time.
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  So cute. So preheat the oven to 325 degrees Fahrenheit.
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  Umm, mining baking sheet with aluminum foil and spray with cooking spray.
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  You're going add two tablespoons of unsalted butter or one-third cup honey.
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  Thank you. One teaspoon vanilla, one quarter teaspoon cinnamon, and one teaspoon kosher salt to a microwave safe bowl and microwave that until the butter is melted about 45 seconds.
• 11:51
  Uh and a standard microwave. Stir until liquid, this mixture is smooth. and add one pound of raw um either or roasted unsalted peanuts to butter mixture and stir until they're even cut it. In other words if you're going to put roasted peanuts in there just make sure they're unsalted because you don't want to have too much salt in this thing. Pour those peanuts into a prepared baking sheet and spread them evenly into a layer.
• 12:17
  Bake them for 20 minutes during every five minutes to get an even roasting all around those peanuts. Remove the peanuts once they're golden brown and start to distribute any honey that's dripped into the baking sheet.
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  Sprinkle a quarter cup granulated sugar and one teaspoon salt.
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  Uh, enjoy them warm or cold whatever you want.
• 12:35
  Here's what to look for this week gang. Uh, we'll get an update on sign contracts for February with a new impending home sales data is released on Monday and Thursday respectively.
• 12:43
  Plus appreciation data. Uh, for January from Case Shiller and the Federal Housing Finance Agency we reported on Tuesday. Look for the final reading for the fourth quarters to 2023 gross domestic product aka GDP and the latest job claims on Thursday.
• 13:00
  Ready, back. Things what will likely be the biggest news of the week and it's not that it's just good Friday. The biggest news of the week is the Fed's favorite measure of inflation. The personal consumption expenditures and again there's two parts of that. We'll talk about that next week.
• 13:15
  I get my name's Larry Bailey. Awesome technology Zinc.
• 13:18
  Thanks very much for listening along and please reach out if you actually want to know about everything that's happening inside your compass with the settings analyzer from awesome technologies.
• 13:29
  You guys be great. Thanks very much. Take care.
• 13:32
  Bye bye.