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Quiet Week for Rates

Economic Observer: Up-to-date information on the latest financial news

Overview: With little major economic news over the past week, mortgage markets were relatively quiet, and rates ended nearly unchanged.

 

A shortage of inventory continues to restrain housing market activity. In December, sales of existing homes, which typically make up about 90% of the market, fell a little from November and were 6% lower than last year at this time. On an annual basis, 2023 was the slowest sales pace since 1995. Inventory levels remain stubbornly low at just a 3.2-month supply nationally, well below the 6-month supply typical in a balanced market. The median existing-home price of $382,600 was 4% higher than last year at this time.


While many regions desperately need additional inventory of homes, the latest data on construction activity was mixed. In December, single-family housing starts fell 9% from November (following a massive 18% increase last month) but still were 16% higher than a year ago. Single-family building permits, a leading indicator of future construction, rose to the highest level since May 2022. Largely due to lower mortgage rates, a separate survey of home builder sentiment on housing market conditions from the National Association of Home Builders (NAHB) unexpectedly surged from 37 to 44.

 

The Department of Labor releases the total number of new claims for unemployment insurance each week, and the latest reading was just 187,000, the fewest since September 2022. This is even lower than the levels typical during 2019 prior to the pandemic. Although some other recent economic reports such as payroll growth and job openings have suggested some easing of labor market conditions, the data on jobless claims has remained very strong. While companies have been slower to create new positions since the Federal Reserve tightened monetary policy, so far they have been reluctant to let workers go.


 

Existing-Home Sales (millions)

Chart of Core CPI annual percentage change from April to December 2023

 

Week Ahead

Jan. 25

European Central Bank meeting

Q4 gross domestic product (GDP)


Jan. 26

Personal Consumption Expenditures (PCE) Price Index

Personal Income and Outlays


Jan. 31

Federal Reserve meeting

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