The biggest issue with the housing market over the past couple of years is that it has been heavily slanted towards a "sellers' market with very low and in some cases, no inventory available in many areas of the country.
But, could this be the start of some relief for those that have been looking to buy a home? A recent survey by the National Association of Realtors showed that more and more homeowners think now is a good time to sell.
The survey found that 77% of Americans think now is a good time to sell. Half of the respondents strongly believe now is a good time to sell, up from a 46% share in the second quarter, while 27% moderately believe this is the right time, down from 29% last quarter.
Homeowners in the West (85%) and those who currently own a home (82%) were most likely to have the sentiment. Only 22% believe that now is not a good time to sell, down from 29% in the previous quarter.
NAR Chief Economist Lawrence Yun said several consecutive years of strong home price growth are enticing homeowners to consider selling.
“Though the vast majority of consumers believe home prices will continue to increase or hold steady, they understand the days of easy, fast gains could be coming to an end. Therefore, more are indicating that it is a good time to sell, which is a healthy shift in the market,” he said.
Source: Housing Opportunities and Market Experience Survey - NAR
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 4.50 MBS) lost -75 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move higher for the week, they also reached their highest levels in over 7 years.
Overview: Mortgage backed securities sold off (higher rates) due to a very "hawkish" tone from the Fed, very strong economic data (ISM Services) and very strong Jobs data - even with weather related (hurricane) headwinds.
Jobs, Jobs, Jobs:
Non Farm Payrolls (NFP) September 134K vs est of 185K
NFP August revised from 201K to 270K
NFP July revised from to 147K to 165K
The rolling three month average is now a healthy 190K
Average Hourly Earnings YOY 2.8% vs est fo 2.8%
Average Hourly Earnings MOM 0.3% vs est of 03%
The national Unemployment Rate is 3.7% vs est of 3.8%
The Participation Rate 62.7% is vs est of 62.7%
In a separate report, the September ADP Private Payrolls Employment Report showed a surge of 230K new jobs which beat out forecasts of 185K. August was revised higher from 163K to 168K.
The Talking Fed:
Chicago Fed President Charles Evans said that he was comfortable with expectations in financial markets that the U.S. central bank will raise interest rates again in December.
Richmond Fed President Thomas Barkin said that the U.S. economy appears strong but eventually might face shocks such as a “political crisis” or an abrupt and difficult exit by Britain from the European Union.
Fed Chair Jerome Powell spoke just one week after the Federal Reserve raised their Fed Funds Rate. He spoke at the 60th Annual National Association for Business Economics Annual Meeting in Boston.
Overall, his tone remained "hawkish" as it has for all of his speeches since he became Fed Chair. Here are a few statements/takeaways:
• “Our best estimates, however, suggest that so long as inflation expectations remain anchored, a modest steepening of the Phillips curve would be unlikely to cause a significant rise in inflation or demand a disruptive policy tightening. Once again, the key is the anchored expectations.”
• "This historically rare pairing of steady, low inflation and very low unemployment is testament to the fact that we remain in extraordinary times. Our ongoing policy of gradual interest rate normalization reflects our efforts to balance the inevitable risks that come with extraordinary times, so as to extend the current expansion, while maintaining maximum employment and low and stable inflation.”
• Powell expresses confidence that low unemployment won’t spur a takeoff in prices that would force the Fed to hike interest rates aggressively.
• One key quote: “The rise in wages is broadly consistent with observed rates of price inflation and labor productivity growth and therefore does not point to an overheating labor market"
• Another: "Our course is clear: Resolutely conduct policy consistent with the FOMC’s symmetric 2 percent inflation objective, and stand ready to act with authority if expectations drift materially up or down"
• And finally: "So long as inflation expectations remain anchored, a modest steepening of the Phillips curve would be unlikely to cause a significant rise in inflation or demand a disruptive policy tightening"
• Powell doesn't offer any hints at how high rates might go this cycle
ISM Services: Can we say "blockbuster"? The September reading hit its highest level in 20 years!!! This report represents MORE than 2/3 of our economic engine.