“Happiness often sneaks in through a door you didn’t know you left open.”—John Barrymore, American stage, screen, and radio actor
NATIONAL MARKET UPDATE
Data firm Black Knight reports home price growth in June dropped nearly two percentage points, the largest monthly slowdown since the early 1970s. June also saw the largest single-month inventory increase in 12 years.
CoreLogic, another major data outfit, found price growth slowed for the second month in a row. They now forecast annual home price appreciation will drop to 4.3% by June 2023, in line with average price growth from 2010 to 2020.
Residential Construction Spending in June fell 1.6% below the revised May estimate. At a seasonally adjusted annual rate of $923.7 billion, home building is still a solid 15.6% higher than a year ago.
REVIEW OF LAST WEEK
STOCKS WEATHER JOBS JOLT... Friday, a blockbuster July jobs report rattled traders worried it would encourage the Fed to hike rates aggressively. But calm prevailed, with two major stock indexes up, one down a tick for the week.
With the 528,000 jobs added in July, nonfarm payrolls are finally higher than they were pre-pandemic, with 3.5% unemployment back to its pre-pandemic low. Too bad 5.2% wage growth isn't keeping up with 9.1% inflation.
Investors were buoyed by a drop in commodity prices and by corporate earnings largely better than feared. ISM Non-Manufacturing gained, ISM Manufacturing dipped, but both sectors remain in expansion territory.
The week ended with the Dow down 0.1%, to 32,803; the S&P 500 UP 0.4%, to 4,145; and the Nasdaq UP 2.2%, to 12,658.
Anticipating bigger Fed rate hikes, bonds sank, the 30-year UMBS 4.5% dropping 0.97, to $100.28. Yet the national average 30-year fixed mortgage rate fell for the third straight week in Freddie Mac's Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW… The Q2 home ownership rate has increased for five straight quarters, showing buyers are finding paths to home ownership despite the headwinds, with households under 35 years old driving the growth.
THIS WEEK'S FORECAST
INFLATION STILL HIGH, CONSUMER SENTIMENT STILL LOW... For July, the Consumer Price Index (CPI) is expected to report inflation still rising. The same goes for wholesale price inflation, tracked by the Producer Price Index (PPI). Small wonder that University of Michigan Consumer Sentiment for August should remain near historic lows.
FEDERAL RESERVE WATCH
Forecasting Federal Reserve policy changes in coming months. The strong July jobs report has Wall Street now expecting another three-quarter percent rate hike in September, a quarter percent bump in November, and again in December. Note: In the lower chart a 68.0% probability of change is a 68.0% probability the rate will rise.
AFTER FOMC MEETING ON:
Probability of change from current policy:
AFTER FOMC MEETING ON:
BUSINESS TIP OF THE WEEK
If you’re doing something correctly, don’t adjust it. Just keep doing more of it—it may be the secret to your success. And don’t try to be all things to all people. Know your value proposition and how it meets your customers' needs.
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