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Is housing contracting?

8 · 16 · 22

Hey, it’s Mike Lynch with Ameri first financial and it’s time for your Monday morning mortgage update for the week of August the 15th. I know a lot of you have your kids going to school this week. So blessings to everybody and hope it’s a great first day for, for all your kids. So let’s talk about last week and what ha is gonna happen this week.

Last week we actually saw nothing happen with rates. The market was flat. We definitely had some volatility. But ended the same way it started. We had inflationary numbers come out on Wednesday and Thursday and there was a moderate. Doesn’t mean that we’re reducing inflation. It just didn’t go up as high as it’s been going up.

We’re still at a 40 plus year high, still bad news, but at least it didn’t go up as high as it has been. And again, no changes to rates. So what are the three things we’re looking at this week? We’re looking at retail sales. We’re looking at the fed. Fed’s gonna be talking a little bit before the September meeting and then a bunch of data housing data primarily this week.

So retail sales retail sales will come out. For the July numbers on Wednesday. And really what we’re gonna be looking for is are people buying things now, the last number that came out showed that retail sales were up, but it wasn’t cuz people were buying more. It just be it’s just because the prices were up.

And so those numbers were higher, but for the wrong reason. So now. Now that we’ve had inflation, now that those prices have been up, will we see these retail sale numbers come down and remember if this shows that the economy is slowing, this means that we’re, we’re definitely getting into the recession that we know we’re in.

And what’s that really look like coming into the big retail season of Christmas and, and, and the holidays. Second thing is fed. So a lot of fed members are gonna speak this. Headed into the September fed meeting and they’re posturing, they’re giving their insight. Remember the fed is gonna meet in September and they’re probably gonna do another three quarters of a point rate hike.

That’s the expectation again, they’re curbing inflation. We’ve talked about that so much. And so a lot of. Focus will be on what they say, what what’s their position? Are they gonna raise it three quarters? Are they gonna raise it a half now that the inflation numbers are moderating increase. And again, they’re not going down.

Third thing is data there’s manufacturing and housing data. So manufacturing is important. Basically it shows us our business is spending money. Are they making more stuff? Now? The number we had. Months showed that the manufacturing numbers were up, but for the wrong reasons if you, if they did a survey, seven out of eight manufacturers say that they would actually make more, but they couldn’t find workers.

They couldn’t find people to work. So what are these numbers gonna look like this week? New York fed manufacture number, New York manufacture numbers came out and they were, they were down 31%. Now that. Represent the country, it just represents New York. So what are some of those numbers gonna look like?

Is it gonna show our economy is weakening and slowing down? We’ll definitely pay attention to that. And a lot of housing data this week, new home sales on Wednesday, one report that came out today was builder sentiment, home builder sentiment. It was below 50%. Now this. A big number. It means that builders don’t have a lot of confidence in what the future housing market looks like.

Anything under 50% is a contraction in building. And so obviously not a great number. We know the housing market is cooling. We know there’s a correction. But what does this look like? Long term after the housing crisis in eight, nine and 10 building basically stopped. And there’s a lot of people that believe that our low inventory that we have right now is a result of that building stopping and just a freeze on building and people got out of the business and they stayed outta the business for a long time.

And that building never caught pack up. You know, we have 12 million new households that didn’t exist in 2008, nine and 10 that we have those now. And that just, just the numbers of more millennials buying houses, more people getting into the housing market means that demand was up and there weren’t enough homes to meet the demand.

And we know that building a house isn’t like making a car, you can’t just pop ’em off the the line. It takes time and building costs of gun up. So now that builders are slowing down or even retracting in their. Demand isn’t slowing. As far as new households, the increased interest rates have slowed demand a little bit, but we’re still at a three month inventory nationwide.

And we know a six month inventory of homes is a normal market. So we’re still below a normal market. It’ll be interesting to see if we do see a, a lasting contraction in building what that means long term to the housing market with people that wanna buy homes, once these. Come back down in a recession, if that’s gonna have a long term impact.

So lot of stuff coming out this week, we expect a very, very volatile week. We are in a locking position. We’re not playing any games with with locking rates and, and people’s money. If you have any questions about the market, please let me know. If you know, somebody can benefit from this video, please forward it to them.

Have a fantastic day and we’ll talk to you soon. Bye.

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