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8/10/22


The Bureau of Labor Statistics (BLS) released its Jobs Report for July, showing that there were 528,000 jobs created, more than double the expectations. There were also positive revisions to the data for May and June adding 28,000 additional jobs in those months combined. With these numbers, the Unemployment Rate declined from 3.6% to 3.5%.


Sounds great, right? Let's take a deeper look...


The BLS Jobs Report consists of two different reports - the Household Survey, where the Unemployment Rate comes from, and the Business Survey, where the headline job number comes from. The Household Survey also has a job loss/creation component to it and it showed that there were only 179,000 new jobs created, which is very different from the 528,000 reported.

And although the headline unemployment rate decreased, it's important to note that this figure removes people who are not actively searching for a job, of which there were nearly 6 million people. The U-6 All-In Unemployment Rate, which adds back all these individuals and is more indicative of the true unemployment rate, remained at 6.7%.

The increase in jobs combined with the decline in GDP that we have seen speaks to a lack of productivity, where more employees are being hired but fewer goods are being produced. This can add to the inflation pressures we are already experiencing.

Now, let's factor in the Initial Jobless Claims.






















While we have not seen major increases in Initial Claims each week, they have been consistently moving higher. Continuing Claims, or people who continue to receive benefits after their initial claim is filed, rose by 48,000 to 1.416 million. In addition, the Job Openings and Labor Turnover (JOLTS) report showed the number of hirings fell for a fourth straight month, and that job openings fell by 600,000 to 10.7 million in June.


Unfortunately, this upward trajectory is likely to continue, given the announcements of significant layoffs from several public companies, which means we will eventually see a higher unemployment rate. This report may be the “canary in the coal mine” signaling that the job market is starting to soften.


So, here is something interesting to think about. There are just under 11 million jobs available in the United States and there are about 6 million people in the labor force who are not looking for work. Many things factor into this - location, industry, and reason for filing to name a few.

In contrast to the information above, CoreLogic released some positive news. Their Home Price Index report for June showed that home prices rose by 0.6% from May and 18.3% on a year-over-year basis. Although this annual reading declined from 20.2% in May, it is still robust. CoreLogic forecasts that home prices will appreciate 0.6% in July and a total of 4.3% in the year going forward.

Remember, even 4% appreciation can still be meaningful for wealth creation. For example, if someone bought a $400,000 home and put 10% down, that means they would gain $16,000 in appreciation over the next year and earn a total of 40% return on their investment.


Looking ahead, inflation data will be reported later today in the July Consumer Price Index and tomorrow in the July Producer Price Index (measuring wholesale inflation). The latest Jobless Claim data will be reported on Thursday. Stay tuned, we'll be breaking these numbers down for you next week.



 


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S'more Cheesecake

Did you know August 10th is National S'mores Day? Now you do!

We've got a fun take on the campfire favorite, except without the smoke in your eyes.





 

Do you have questions about how the current market will affect your ability to obtain a home loan? Connect with us today!


Disclaimer: This information is provided by MBS Highway and is accurate as of the date sent but subject to change thereafter.

7/26/2022


Existing Home Sales fell 5.4% from May to June but let's think about this in the context of the market. June’s report likely reflects people shopping for homes in April and May, which included much of the rise in rates we’ve seen this year. While it’s true that buyer activity is slowing, there are a few pieces of the puzzle that suggest demand will remain strong and continue to be supportive of home prices.


Homes remained on the market for just 14 days on average in June, the fewest days on the market since tracking this metric began in 2011. Plus, 88% of homes that sold in June were on the market for less than one month. Homes priced right are selling quickly. The FHFA (Federal Housing Finance Agency) released their House Price Index, which measures home price appreciation on single-family homes with conventional loans. Prices rose 1.4% in May and are up 18.3% year-over-year, which is a slight decline from 18.7% in the previous report, but still very hot.

In regard to inventory, there were 1.26 million homes available for sale at the end of June, which is nearly 10% higher than May’s inventory level. This equates to a 3 month supply of homes, up from 2.6 months in May. However, six months is considered a balanced market, so this data speaks to the ongoing imbalance of supply and demand, which also should continue to be supportive of home prices. The media may report an increase in inventory but we all know that each year, many parents list their homes for sale by late spring or early summer so their kids are settled before the new school year begins in the fall, causing a normal inventory build over the summer months.



In addition, CoreLogic’s Single-family Rent Report showed that annual single-family rent growth remained at a record high in May, with rents up 13.9% when compared to May 2021. This report includes both new and renewal rents, which are rising around 8%. These increases in rental prices should continue to push people to see the opportunity in housing, which again will help homes continue to appreciate.


Lastly, Zillow released their July Home Values Index, showing that they think home values will increase 7.8% over the next 12 months. While this was a revision lower due to slower monthly appreciation numbers and a slower pace of sales, this level of appreciation is still extremely strong for wealth creation. Zillow believes we will see home price appreciation moderate to pre-pandemic levels, but a slower pace of appreciation is very different from a crash.

Looking ahead, the biggest market news of the week will be announced this afternoon with the Fed's Monetary Policy Statement and press conference. So long as the Fed does what they're expected to do in hiking the Fed Funds Rate by 75 basis points and doesn't scare the markets, we should see a favorable effect on interest rates.




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Greek Quinoa Salad

Keen-wa... quin-noah...However you pronounce it, this salad is delicious! Either as a side or as the meal itself, this simple recipe from Two Peas & Their Pod will be a hit.





Do you have questions about how the current market will affect your ability to obtain a home loan? Connect with us today!




Disclaimer: This information is provided by MBS Highway and is accurate as of the date sent but subject to change thereafter.


Saving for a mortgage is simple but not easy. For many looking to transition from Renter to Homeowner, saving for a down payment and closing costs seems an impossible hill to climb. Luckily, there are loan programs available now that make saving for a home much more manageable for the average American. Even with these programs, the prospective home buyer is expected to come up with at least 3.5% in down payment and around 4% for closing costs. For a $250,0000 home, that’s $18,750 in down payment and closing costs. So, how do we get there? Again, it’s simple but not easy. Saving for a home is exactly that -- saving. We all know what it means but so many of us struggle to put it into practice.


First, decide where you will put the money you’re saving and don’t touch it. Pretend that this money doesn’t exist. If your bank allows you to split up money in different pools or sub-accounts, do that. If not, try setting up a separate savings account. Whether it’s with your current bank or a different one, the idea is to make it harder to touch the money. If it takes a few days for transfers to be completed, you’ll be less likely to dip into your savings for impulse buys.


Ready for the hard part? Next, cut down your monthly debts. There are online subscriptions for everything, all of which are great for silently draining your bank account. Decide which ones are absolutely necessary, cancel the others, and reroute that money to your new savings account. If you have a car payment that takes a significant portion of your monthly income, consider trading it in for one with a lower payment. Credit cards are great for things like gas and groceries but not for unnecessary purchases. Be sure to keep your balance under ⅓ of your credit limit -- this will build your credit score and help you get a better interest rate on your future mortgage. One thing that many of us have learned to do in the past year is cooking at home. If you’re included in that group, you’ve probably noticed the impact it has had on your bank account. Keep it up! Come up with a few staple recipes that use similar ingredients and are easy to prepare. Buying in bulk is usually cheaper. Although the savings per purchase are small, they’ll add up over the course of a few months.


Here’s some good news: the habits you’ll develop to save for your home are the same ones you’ll need to actually get approved! There are plenty of people who have enough money saved for both a down payment and the closing costs but, because of their recurring monthly debts, they don’t qualify for the home they want. Saving is a decision to shift your mindset. It takes some discipline and creativity but once you start building the habit, the monthly savings will snowball and you’ll be shopping for your new home in no time!



Doug Kennell

Sr.BranchManager, LoanOriginator

NMLS#364758

SovereignMortgageInvestments,Inc.

NMLS#222681

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