Calm Week to End Not-So-Calm Year

While this week was uneventful and while 2022 was more volatile in terms of movement in the housing/mortgage market, we can still reflect on 2023 as a year of extremes.

Incidentally, that thesis is supported by some of the only economic data released this week.  Pending Home Sales came out perfectly unchanged from last month, but still at the lowest levels in a long time (not counting the 2020 lockdowns).  Note that most of the move down to these lows occurred in 2022, before extending just a bit more in 2023.

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It's a similar story for interest rates.  2022 was marked by the largest change in mortgage rates in a single year since 1981, but 2023 took the outright levels just a bit higher.

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On a more hopeful note, 2023 may end up being remembered not only for the extremes, but also by the start of the potential shift in rates and housing metrics.  Strikingly, by the end of the year, mortgage rates nearly made it back to levels seen at the end of 2022.

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It was a similar story for the broader bond market, as seen in 10yr Treasury yields below.  Stocks, meanwhile, mostly moved higher.

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In terms of home prices, 2023 was notable in that Case Shiller's price index hit negative territory in year-over-year terms, but more notable because forecasts called for deeper, longer-lasting losses in late 2022.  In other words, there's been an impressive ability to hold ground, even if a lot of the credit goes to a lack of inventory and a low transaction count.

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It will be interesting to see how the inventory situation is impacted by lower interest rates (IF rates are able to continue moving lower).  That's a big and important "IF."  It will be resolved by economic data in the first quarter of 2023.  The first batch of important data arrives next week with several key reports starting Wednesday.  Friday's jobs report is the most important report. 

Recently Released Economic Data

Time Event Actual Forecast Prior
Tuesday, Dec 26
9:00 Oct FHFA Home Price Index m/m (%) 0.3% 0.6%
9:00 Oct FHFA Home Prices y/y (%) 6.3% 6.1%
9:00 Oct CaseShiller 20 mm nsa (%) 0.1% 0.2%
9:00 Oct Case Shiller Home Prices-20 y/y (% ) 4.9% 4.9% 3.9%
Thursday, Dec 28
8:30 Dec/23 Jobless Claims (k) 218K 210K 205K
8:30 Nov Wholesale inventories mm (%) -0.2% -0.4%
10:00 Nov Pending Home Sales (%) 0% 1% -1.5%
Friday, Dec 29
9:45 Dec Chicago PMI 46.9 51 55.8
Tuesday, Jan 02
9:45 Dec S&P Global Manuf. PMI 47.9 48.2 49.4
Wednesday, Jan 03
7:00 Dec/29 MBA Purchase Index 140.7 148.7
7:00 Dec/29 MBA Refi Index 358.2 437.6
10:00 Dec ISM Manufacturing PMI 47.4 47.1 46.7
10:00 Nov USA JOLTS Job Openings 8.79M 8.85M 8.733M
14:00 FOMC Minutes
Thursday, Jan 04
7:30 Dec Challenger layoffs (k) 34.817K 45.51K
8:15 Dec ADP jobs (k) 164K 115K 103K
8:30 Dec/30 Jobless Claims (k) 202K 216K 218K
Friday, Jan 05
8:30 Dec Non Farm Payrolls 216K 170K 199K
8:30 Dec Unemployment rate mm (%) 3.7% 3.8% 3.7%
10:00 Dec ISM N-Mfg PMI 50.6 52.6 52.7

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