Buyer Activity Supports Home Values
The closely watched Case-Shiller Home Price Index showed prices dipped 0.3% from November to December before seasonal adjustments. After accounting for typical seasonal trends, prices actually rose 0.4%, marking another month of solid gains. On an annual basis, national home prices are up 1.3%.
The Federal Housing Finance Agency (FHFA) House Price Index, which tracks homes financed with conventional mortgages,
reported a 0.1% month-over-month increase on a seasonally adjusted basis and a 1.8% rise year over year.
What’s the bottom line?
As mortgage rates have eased, more buyers have returned to the market. At the same time, builders remain cautious, and adding new supply takes time due to permitting and construction timelines. When demand improves, but inventory grows slowly, prices tend to stay supported. If rates continue to move lower, renewed demand could place additionalupward pressure on home values.
Looking ahead, Fannie Mae and Pulsenomics recently released their Home Price Expectations Survey, which polls 150 top economists for their forecasts. The current median projection calls for 15% cumulative price growth over the next five years. For perspective, a $500,000 home could gain approximately $75,000 in value during that time – highlighting the long-term wealth-building potential of homeownership.
Wholesale Inflation Runs Hot in January
The latest Producer Price Index (PPI) showed wholesale inflation rose 0.5% in January and 2.9% compared to a year ago, both above expectations. Core PPI, which excludes food and energy, climbed 0.8% for the month and 3.6% year over year, also topping forecasts.
What’s the bottom line?
The Federal Reserve continues to balance persistent inflation pressures with signs that the labor market is cooling. Sticky inflation supports a cautious approach to rate cuts, while softer employment data increases pressure to ease policy. With wholesale prices coming in stronger than expected, the Fed may remain patient as it evaluates its next move on interest rates.
Gig Work May Be Masking Labor Market Strain
Initial jobless claims rose by 4,000 to 212,000 in the latest week, still low by historical standards. Meanwhile, continuing claims (the number of people receiving benefits beyond their first week) fell by 31,000 to 1.833 million.
What’s the bottom line?
On the surface, low first-time claims suggest layoffs remain limited. But the rise of gig and contract work may be distorting the picture. Instead of filing for unemployment, more displaced workers are turning to app-based or freelance jobs to generate income, especially since unemployment benefits often don’t fully cover housing, utilities, insurance, and other essential costs.
At the same time, continuing claims remain relatively high, indicating that many unemployed workers are taking longer to secure new full-time roles.
What to Look for This Week
A busy week of labor market updates begins on Wednesday with ADP private payroll figures. On Thursday, the focus shifts to the latest jobless claims, followed by Friday’s comprehensive employment report, which includes non-farm payrolls and the unemployment rate.
Technical Picture
Last Friday, Mortgage Bonds broke above a key resistance level at 100.38, which had capped gains in recent weeks. If they hold
above that mark, there’s room to improve before testing the next resistance level at the 100.84 Fibonacci ceiling. Meanwhile, the
10-year Treasury fell below the critical 4% floor and moved toward its next level of support at 3.947%.
Data and analysis provided by MBS Highway. As always, contact me anytime to continue the dialogue.
Mike Nelson, CEO - Efficient Lending, Inc"
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