Mortgage Market Update - Existing Home Sales, Jobless Claims, and a Recession Indicator - 11/27/2023

Hey everyone, it's Larry Bailey from Mortgage Workflow Partners. This is for the Week of November 20, 2023, in Review:

It was a quiet week ahead of the Thanksgiving holiday, but the markets gobbled up the latest news on Existing Home Sales and Jobless Claims. Plus, find out what a key recession indicator is signaling. Here are the highlights:

• Hope Ahead for Housing Inventory?
• Weekly Jobless Claims Decline More Than Expected
• What an Important Recession Indicator Is Saying

00:00 Introduction
00:26 Encompass Platform Update
00:49 Existing Home Sales
01:27 Jobless Claims
05:03 Recession Indicator

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Transcript

0:00

Hey everyone, Larry Bailey here with Mortgage Workflow Partners bringing you another weekly newsletter. This is the newsletter for November 27th, 2023. We're going to go back and review the week of November 20th, 2023. This information is brought to you from MBS.com. It's highway your trusted source for mortgage market intelligence. It's also brought to you from the team at Mortgage Workflow Partners making sure that you are up to speed. Gang, we are all moving to the web if you're using the Encompass platform. Check out what the journey to the web for the Encompass platforms all about over at the mortgage community. You can also find more information over at mortgageworkflowpartners.com. Just simply click on the Encompass journey to the web and check it out. So this is for the week of November 20th, 2023 in review. Here's the stories. It was a quiet week ahead of the Thanksgiving holiday last week, but the markets gobbled up the latest news on existing home sales and jobless claims. Plus find out what a key recession indicator is signaling. Here are the top stories. First one is hope ahead for housing inventory. Next story is weekly jobless claims decline more than expected. And the third story is what an important recession indicator is saying. Listen, if you're watching this on video over at the mortgage community, thumbs up double thumbs up for you. Thank you very much. If you're listening to this the podcast. Thank you very much, but get over to mortgage community. It's free. You can join no matter where you work for who you work for. It doesn't matter. Join on the community and check out this replay on screen so you can follow along while you listen to my voice. So the first story is hope ahead. For housing inventory, there's an image on here about existing home sales and you'll see two lines there, ones for sales and ones for inventory. And so here's the story. Existing home sales fell 4.1% from September to October in a three to a three point. 79 million unit annualized pace reaching a 13 year low. This is per the National Association of Realtors, also known as NAR. Sales were also lower 14.6% lower than they were October of last year 2022. This report measures closings on existing homes and is a critical gauge for taking the pulse of the housing sector. So the bottom line here is the NAR noted that the elevated mortgage rates and tight inventory remain key constraints on home sales. Of course, there were a 1.15 of million homes available for sale at the end of October. That's down from 1.22 million a year earlier in nearly half the levels. That's half, 50% of the levels seen in 2019. So half the inventory is poof gone. The inventory is even tighter than that figure actually implies, the 1.15 million, because many homes that counted in that number are in the existing inventory are already under contract. So they're not truly available, just kind of sitting waiting for closings. Instead of last month, it's only 737,000 homes, you know, for 315 million people. So, you know, there's that. Despite these ongoing inventory constraints, homes continue to sell quickly, averaging just 23 days on the market in October. And, of course, that's average across the entire country. I said this before, there's homes. I live in Hainesport, New Jersey. Homes go, I don't know, in a couple days. Like, I don't even know why you need to put it on the MLS. Like, just put a sign in the ground and be like, hey, I'd like to sell my home. And it's probably going to sell pretty quick. So, out of, out of that number, 66% of homes sold in less than a month showing that demand is still strong for what's available. In fact, the NAR noted that multiple offers are still occurring, especially on starter and mid-price homes. There is positive news for buyers as well. According to NAR chief economist Lawrence Young noted that housing inventory is expected to improve heading into the spring. We shall see, Mr. Young. Next story is weekly jobless claims. Claims decline more than expected. So the initial jobless claims fell by 24,000 in the latest week as 209,000 people fall for unemployment benefits for the very first time. This decline was larger than expected and it comes after first-time finance. The continuing claims also fell by 22,000 as 1.84 million people are still receiving benefits after filing their initial claim. This was the first decline since September when continuing claims hit a low of 1.8 million. Bottom line here gang is that initial jobless claims remain relatively low on a historical basis. This is suggesting that employers are still trying to hold onto their workers, and while continuing claims declined in the latest week, they have risen by 182. This next story is what an important recession indicator is saying. So the college conference board reported that the leading economic indicator, also known as LEI, those things fell .8% in October, which is the 19th consecutive month of decline. So just so you understand, the LEI tracks where the economy is headed and its trajectory. Its trajectory remains negative and its 6- and 12-month growth rates also held negative territory in October. This is explained by Justine Zabinski-Lemonica, who's the senior manager of business cycle indicators. Not really sure, but that's where the information came from. So, what's the bottom line here? So historically, once the LEI turns negative, and again, for those in the mortgage industry, LEI, we know LEI is the legal entity identifier. This is not that. This is the leading economic indicator. So if you're hearing LEI, don't get confused. LEI turns negative, we have seen, on average, 22-month lead time until the US enters a recession. In fact, the last time we saw a stretch of negative reports like this was 2007 through 2009, ahead of the Great Recession. So Zabinska Lamonica added that quote The conference board expects elevated inflation, high interest rates, and contracting consumer spending due to depleting pandemic savings and mandatory student loan repayments to tip the US economy into a very short recession. It's not a great thing for the economy. As said before, one positive aspect of periods of recession is that they are always, according to the text here, they are always coupled with lower interest rates. We shall see. History is, is not proof of what will happen. It's just probably going to happen, but we'll see. Here's the family hack of the week. Hey, did you know that today, I'm recording this on November 28th because I was out of office yesterday, the 27th. So this is a national French toast day. So if you're hearing this after the 28th, you can still go back and make this delicious recipe. This is brought to you by I don't even know who by All Recipes. So make breakfast extra special with this easy brioche French toast recipe from All Recipes. Thank you. This is .com, right? AllRecipes.com. Anyway, you cut this brioche bread into eight thick slices and set it aside in a small bowl. You're going to combine one teaspoon ground cinnamon, one quarter teaspoon ground nutmeg, and two tablespoons of sugar. You're going to whisk the cinnamon mixture with four eggs, one quarter cup milk, and one half teaspoon pure vanilla extract. It's a lot of vanilla extract. Pour that into a shallow container like a pie plate. Like some shallow. So in a ten inch or twelve inch skillet, melt four tablespoons of butter. It's like a half stick. Over medium heat, dip that bread mixture dip the bread into the egg mixture and fry until golden brown. Remember, you're making french toast. So if you've never made french toast before, this is how you do it. You're gonna and then flip it to cook the other side. You're gonna top that with fresh fruit and your favorite syrup. Yeah, you can, I, I personally like, I'll just make it with, with white bread, but it is nicer when you get a thick bread or even hawaiian bread. Like, if you can get your hands on some hawaiian bread, hawaiian loaf bread, that's the bomb right there. So here's what to look for this week, gang. A plethora of how housing news is ahead starting Monday with October's new home sales. Tuesday brings an update to home price appreciation for September via the Case Schiller and the Federal Housing Finance Agency also known as FHFA. I look for October's pending home sales Thursday. Also note the second reading for the third quarter GDP will be reported Wednesday as tomorrow the 29th while the latest job list claims and the Fed's favored inflation measure, which is the personal consumption expenditures, will be delivered Thursday. At the top here the screen's been changing while I've been talking but it's at one of 1.23, which is still phenomenal compared to where we were not too long ago. Down 13 basis points for today so far so hopefully rates are softening, meaning getting better. Definitely work with folks that you trust to get you the best mortgage products and have a great day. Good day everybody, thanks for always listening. My name's Larry Bailey with Mortgage Workflow Partners. Again, this information brought to you from MBS Highway. You can get more information over at MBSHighway.com, sign up for a subscription. Truly awesome stuff. Thanks Barry, Hidbeeb and team. You've always been, you've always been ACES, so thanks for getting this information. Have a great day everybody, bye bye.