Homeowners looking to add personality and individuality to their home are more likely to undertake a do it yourself remodel than hire a professional, according to the National Association of Realtors®’ 2019 Remodeling Impact Report: DIY. The report also shows that cash-strapped millennials are the most likely of any generation to take on a DIY project.

Respondents indicated that the number one reason for undertaking a project was to increase functionality and/or livability of their home (35 percent for DIYers and 41 percent for those hiring a professional). That is followed by increasing the home’s beauty and aesthetics (19 percent and 18 percent, respectively) and adding durable and long lasting materials and appliances (15 percent and 18 percent). Projects which were designed to add personality to a home were twice as popular among DIYers than among those hiring a professional (10 percent and 5 percent).

Nearly three-fourths of Generation Y and Millennial consumers (73 percent,) over half of Generation X (51 percent) and 50 percent of Younger Boomers choose to DIY home projects. Seventy percent of the Silent Generation indicated that they hired a professional to complete their project – the highest of any generation.

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 4.00 MBS) gained +23 basis points (BPS) from last Friday's close which caused fixed mortgage rates to move slightly lower compared to the previous week.

Overview:  We had a holiday-shortened week (New Years) with only three full trading sessions that saw lighter volumes until Friday.  MBS were on the move upward (and therefore mortgage rates were on the move downward) over concerns about the unknown duration of the partial government shutdown and the transition of the House of Representatives to Democratic control and what that might mean for future tax and regulatory policies.  But MBS sold off (and mortgage rates rose) after a very robust jobs report on Friday.

Jobs, Jobs, Jobs: We had a very strong jobs report!
Tale of the Tape:
Jobs.
- December Non-Farm Payrolls (NFP) was much higher than expectations 312K vs est of 177K.
- November NFP revised higher from 155K to 176K
- October NFP revised higher from 237K to 274K.
- The more closely watched 3 month rolling average increased to a staggering 254K
Wages.
- December Average Hourly Earnings increased to $27.48. That is a YOY gain of 3.2% vs expectations of a 3.0% gain.
- Average Hourly Earnings on MOM basis improved by 0.4% vs est of 0.3% and is double the 0.2% pace in November.
Unemployment:
- The Unemployment Rate increased from 3.7% to 3.9%. The market expected 3.7%.
- The Participation Rate increased from 62.9% to 63.1%

The Talking Fed:
Fed Chair Jerome Powell and former Fed Chairs Janet Yellen and Ben Bernanke had a cozy panel meeting for the press. Powell made it clear that he would not resign if he were asked to step down and that all Fed Chairs have met with the President during the tenure and he expects to as well but the Fed will remain independent from political influences. He also emphasized that their is no "preset path" for raising rates or adjusting the balance sheet and that they are data dependent. Currently, the economy and labor market are in strong shape.

Manufacturing: The December national ISM Manufacturing Index was a big miss. Coming in at only 54.1 vs est of 57.9. While this is still well above 50.0 which is expansionary, it is much lower than expected. ISM Prices Paid dropped to 54.9 vs 60.7 in November showing little to no inflationary pressure on the manufacturing side.

What to Watch Out For This Week: