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Pending Home Sales, which measures signed contracts on existing homes, fell 2.3% in September after an 8% gain in August. Sales were down 8% year over year, which is pretty good considering the lack of inventory and tough comparisons. Chief Economist for the NAR, Lawrence Yun, said that rising inventory and less pricing pressure is accounting for the surge – It’s almost comical to see the same media that said housing demand was dying is now saying it’s strong. As we have been saying, if there were move homes for sale there would be more sales.

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BLS Jobs Report

October Jobs Report

The Bureau of Labor Statistics (BLS) reported that were 531,000 jobs created in October, which was stronger than the 450,000 expected. There were 235,000 in positive revisions to August and September, which adds to the strength of this report. The private sector showed strong gains of 604,000, but Government jobs fell by 73,000. Leisure and Hospitality only showed 73,000 in job gains, which was disappointing and a mismatch from the ADP report we saw on Wednesday. The Unemployment Rate decreased from 4.8% to 4.6%. The unemployment rate is derived from the household survey, which has its own job creation component. Within the household survey there were 359,000 job creations, while the labor force increased by 104,000. The number of unemployed people decreased by 255,000, causing the unemployment rate to fall by 0.2%. Average hourly earnings and average weekly earnings are both up roughly 5% year over year. Wage growth is running even hotter if you annualized the pace over the last 6 months. Leisure and Hospitality earnings are up almost 12% year over year, but it appears it’s still not enough to attract the workers we need there.

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Housing Starts – New Construction

Housing Starts  – New Construction

Housing Starts declined 1.6% in September at an annualized pace of 1.55M homes. Year over year, starts are 7.4% higher than this time last year. Single Family Starts, which is the most important, is flat month over month at a 1.08M pace. All of the decline was in multi family – 2 to 4 units were up 20%, but 5 units+ saw a big decline. It’s a miracle to see single family starts at unchanged levels with the labor and supply chain issues. Permits, which are a good forward-looking indicator for Starts, declined 7.7% last month and are flat year over year. Single Family permits, however, were down 1% to the lowest level in 14 months. Because permits are a leading indicator for future single family starts, it signals that supply is going to remain tight into the future. While that makes it difficult to find a home, it should be supportive of home prices. Completions were down 4.6%, which shows how much of a backlog builders have to work through.

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FHFA House Price Index

FHFA House Price Index 

The FHFA (Federal Housing Finance Agency) released their House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts. Home prices rose 1% in August and are up 18.5% year over year, which is down from 19.2%. This is the first time we actually saw prices moderate on an annual basis in quite some time. Again, we are still seeing home prices rise, but at a slightly slower pace.

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Case Shiller Home Price Index

Case-Shiller Home Price Index 

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices rose 1.2% in August and 20% year over year, which was unchanged from the previous reading. This was the first time since early 2020 we have not seen a year over year increase, which aligns with our thought that we likely reached the height of annual growth and will start to see those figures come down. But they are not dropping due to home prices declining, we are just going to likely start seeing slower monthly growth, which when compared to last year, will be lower. The 20-city index also rose 1% in August and 20% year over year, with all the cities showing strong gains. Phoenix, San Diego, and Tampa reported the highest annual gains: Phoenix: 33% San Diego: 26% Tampa: 26%

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New Home Sales

New Home Sales 

New Home Sales, which measures signed contracts on new homes, were up 14% in September at an 800,000 annualized pace, which was stronger than expectations and the highest reading since March. But there were negative revisions to August. When factoring that in, New Home Sales are really up 8%, which his still strong. There were also positive revisions to the previous report, which means today’s gain is really like a 4.5% rise. Year over year sales they are down 18%, but that does not tell the whole story. From 2019 they are up 14%, but we had really tough comparisons from the abnormalities in 2020. Looking at inventory levels – There were 379,000 homes for sale, which unchanged from the previous report, but up 32% from last year. But of the homes for sale, only 9% were actually completed, while the rest are either not started or under construction…which speaks to the backlog of builders and continued tight supply of homes actually being delivered. The Median home price was reported at $409,000, which is up 18.7%, which is high, but down from 20% in the previous report.

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