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Weekly Update 12/11/2023

Rob Tennyson

Weekly Rate Summary*

đź”˝Conventional | 6.625% đź”˝

đź”˝High Balance | 6.990% đź”˝

đź”˝ Jumbo | 6.875% đź”˝

đź”˝ FHA | 6.000% đź”˝

đź”˝ VA | 6.000% đź”˝

*Rates are averages based on specific criteria. This rate may not be available for everyone as terms and conditions apply

Week of December 11th, 2023

The latest labor sector data showed mixed results, while home prices increased. Here are the highlights:

  • BLS Jobs Report Not What We Wanted

  • Private Payrolls Below Expectations

  • Job Openings Lower

  • Jobless Claims

  • Home Prices Hitting Highs

BLS Jobs Report Not What We Wanted

The Bureau of Labor Statistics (BLS) reported that there were 199,000 jobs created in November versus the 190,000 forecasted. Revisions to September and October shaved 35,000 jobs in those months combined. The unemployment rate fell from 3.9% to 3.7%.

The Household Survey, where the Unemployment Rate comes from, is considered more real-time because it’s derived by calling households to see if they are employed. This survey has its own job creation component, which showed 747,000 job gains.

Average hourly earnings were up 0.4% in November, and while that was higher than expected, the year-over-year figure continues to decelerate and now stands at only a 4% increase. This is important as this decline translates to less wage-pressured inflation.

Private Payrolls Below Expectations

ADP’s Employment Report showed that private payrolls were weaker than forecasted in November with 103,000 jobs created. Almost all the job growth came in service-providing industries. Within that sector, leisure and hospitality lost 7,000 jobs.

What’s the bottom line? Nela Richardson, chief economist for ADP, noted that, “Restaurants and hotels were the biggest job creators during the post-pandemic recovery. But that boost is behind us,” signaling that the labor market is changing.

Also of note, annual pay for job stayers increased 5.6% and job changers saw an average increase of 8.3%. These figures have cooled considerably from last year’s highs of 8% for job stayers and 16% for job changers, which is significant because it also suggests lower wage-pressured inflation.

Job Openings Lower

The latest Job Openings and Labor Turnover Survey (JOLTS) showed that job openings fell significantly to 8.7 million in October from 9.4 million in September, missing expectations. The hiring rate stayed the same at 3.7%, which is the lowest since the shutdowns during the pandemic. The quit rate at 2.3% was also unchanged for the fourth consecutive month, and this low rate suggests there’s a lack of employers trying to entice workers with other offers.

What’s the bottom line? Job openings are down by 1.7 million when compared to the same time last year. Plus, the reported total for this October is likely overstated. The increase in working from home means job listings are being posted in multiple states more frequently. As a result, they’re being overcounted in the JOLTS total, suggesting that the report may be even weaker than the numbers suggest.

Jobless Claims

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices nationwide rose 0.7% from August to September after seasonal adjustment, marking the eighth consecutive month of gains. The Federal Housing Finance Agency’s (FHFA) House Price Index also saw home prices rise 0.6% in September, with their index setting new record highs in home prices every month since February.

Note that FHFA’s report measures home price appreciation on single-family homes with conforming loan amounts, which means it most likely represents lower-priced homes. FHFA also does not include cash buyers or jumbo loans, and these factors account for some of the differences in the two reports.

What’s the bottom line? Home values have hit new all-time highs according to Case-Shiller, FHFA, CoreLogic, Black Knight and Zillow, more than recovering from the downturn we saw in the second half of 2022. Prices are now on pace to appreciate between 6-8% this year depending on the index, based on the reported pace of appreciation through September. These indexes show that now remains a great opportunity for building wealth through homeownership and appreciation gains.

Home Prices Hitting Highs

CoreLogic’s Home Price Index showed that home prices nationwide rose 0.2% from September to October, hitting a new all-time high for the sixth straight month. CoreLogic forecasts that home prices will remain flat in November and rise 2.9% in the year going forward, though their forecasts tend to be on the conservative side historically. In fact, CoreLogic’s index is on pace for 7% appreciation in 2023, based on the monthly readings we’ve seen so far this year.

Black Knight also reported that home prices rose 0.2% in October and 4.6% year over year. This is the sixth consecutive record high in home prices in their index. Based on the gains we have seen through the first 10 months of 2023, Black Knight’s index is also on pace for 7% full year appreciation.

What’s the bottom line? The latest rise in home prices reported by CoreLogic and Black Knight echoes the strong growth seen by other major indices like Case-Shiller, Zillow and the Federal Housing Finance Agency. These reports continue to demonstrate why homeownership remains a good opportunity for building wealth through real estate.

Family Hack of the Week

December is National Pear Month. This Pear Crisp courtesy of Taste of Home will be a winner with your family and friends all month long.

Ingredients

  • 8 medium ripe pears

  • 1/4 cup orange juice

  • 1/2 cup sugar

  • 1 teaspoon cinnamon

  • 1/4 teaspoon allspice

  • 1/4 teaspoon ground ginger

  • 1 cup all-purpose flour

  • 1 cup old-fashioned oats

  • 1/2 cup packed brown sugar

  • 1/2 teaspoon baking powder

  • 1/2 cup cold butter

  • Vanilla ice cream (for serving)

Steps

  1. Preheat your oven to 350 degrees Fahrenheit.

  2. Begin by peeling and thinly slicing the pears.

  3. In a greased 13x9-inch baking dish, toss the sliced pears with 1/4 cup orange juice.

  4. In a separate bowl, mix together 1/2 cup sugar, 1 teaspoon cinnamon, 1/4 teaspoon allspice, and 1/4 teaspoon ground ginger. Sprinkle this mixture over the pears in the baking dish.

  5. To make the topping, combine 1 cup all-purpose flour, 1 cup old-fashioned oats, 1/2 cup packed brown sugar, and 1/2 teaspoon baking powder in a small bowl.

  6. Cut in 1/2 cup cold butter into the flour mixture until it becomes crumbly.

  7. Evenly sprinkle this crumbly topping over the pears.

  8. Bake in the preheated oven until the topping turns golden brown and the fruit is tender, which should take about 35 to 40 minutes.

  9. Serve the Pear Crisp warm, ideally with a scoop of your favorite vanilla ice cream. Enjoy!

What to Look for This Week

All eyes will be on the Fed’s two-day meeting which begins Tuesday, with their Monetary Policy Statement and press conference coming on Wednesday. The Fed will certainly be reviewing this week’s inflation data when November’s Consumer and Producer Price Indexes are reported on Tuesday and Wednesday, respectively.

Also of note, November’s Retail Sales and the latest Jobless Claims will be released on Thursday.

Investors will also be closely watching Monday’s 10-year Note and Tuesday’s 30-year Bond auctions for the level of demand.

Technical Picture

Mortgage Bonds ended last week in a range between a dual level of support at the 200-day Moving Average and 38.2% Fibonacci level and resistance at 102.06.

The 10-year ended trading in the middle of a wide range between the floor at the 38.2% Fibonacci level and the ceiling at the 100-day Moving Average.