In this weekly market update, Jordan Keck (Jordan Kick) provides a holiday availability notice, a practical mortgage tip on avoiding appraisal re‑inspection fees, and a detailed analysis of recent economic data. He explains why mortgage rates increased to 7.14% despite the Federal Reserve cutting the federal funds rate by 0.25%, emphasizing the role of bond market expectations and the Fed’s revised outlook on future rate cuts and unemployment. Keck reviews the November Personal Consumption Expenditure (PCE) inflation report, noting a modest 0.1% month‑over‑month rise and a year‑over‑year increase to 2.4%, both below expectations, and a stable core PCE at 2.8%. He then covers October retail sales, which rose 0.7% (above the 0.5% forecast) driven largely by auto sales, and the industrial capacity report showing a 0.1% production decline and a drop in capacity utilization to 76%, the lowest since April 2021, suggesting potential deflationary pressure. Finally, he discusses November existing home sales, which increased 4.8% to an annualized 4.15 million units, outperforming expectations but still below historical averages, and warns that continued high mortgage rates could dampen future sales. Throughout, Keck reiterates his three‑point buying framework—qualification, affordability, and finding the right house—and urges buyers not to wait for rates to fall.
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Good morning and happy Friday. Jordan Kick here, your lender buddy, with your weekly market update. First off, next week we will not be having an update, so Merry Christmas to everybody. Hope you have a great time. Crazy to think that that is coming up on Wednesday. So note that I will be out of the office, but but I will still be available by phone and laptop if you need me. Responses might be a little bit slower, um, so just know that I'll still be here if you need anything. Hopefully you get a chance to enjoy some time with family as well, and then back and ready for a new year in 2025. It's going to be a good one, so, um, definitely excited for the things ahead. As far as market update this week, we did see rates move a pretty good jump higher. We were at 6.87% last week, moving up to 7.14% here about a full— was that quarter percent or more week over week? Biggest part of that was looking at the federal funds rate. We're going to get into this a little bit here, um, actually moving kind of controversial or paradoxically because of that. So hang on for that for a moment. First off, our mortgage tip for the week here is about avoiding appraisal surprises. So I've run into a lot of situations where an appraiser is going out to the property we need a re-inspection back for something that's fairly simple, whether it's a smoke detector, a handrail on the stairs, or just because they couldn't get access to a crawl space or an attic space. I've seen all of those many times, and every single time an appraiser has to go back out, that's looking at somewhere between $100, $150, or $200 fee. So that's an easy way to turn a $10 smoke detector into a $210 smoke detector. So some of the basic things, pretty much what I just mentioned Make sure the home's got smoke detectors. Make sure it has carbon monoxide detectors. Make sure all of the appliances are working. Make sure the appraiser knows where the crawl space and the attic entrances are and that they're not blocked. Appraisers typically not going to try and unlock a door if it's locked. You know, if there's something in the way like a piece of furniture, they're not going to move that. And those are some just really easy basic ways to avoid having to have the appraiser go back out. Other things are if there's repairs being done to the house when the appraiser visits. Doesn't matter if the repairs are going to be done in 10 minutes. If the appraiser was there when they were not done, they are going to have to make note of that and come back out again later. So make sure those are all wrapped up. And then same with handrails. If there's more than 2 steps anywhere, probably has to make sure that has a handrail. Otherwise, that might get called out as a health and safety item. Hopefully that's helpful for you there. As far as our market update, again, starting off, the Federal Reserve did cut the federal funds rate by a quarter of a percent yesterday, but mortgage rates moved higher as a result. So what's going on? Well, hopefully by now, if you've been watching for any period of time, you know that the federal funds rate does not dictate mortgage rates, even though a lot of people still think that. What actually happens is the mortgage market is based on the bond market. They're based on treasuries. They're going to look at the perception on what's happening. So they anticipated the Federal Reserve would already lower rates today. That's not a surprise. That was baked into rates a month ago. What changed is the Federal Reserve commentary. They reduced their expectations for rate cuts next year from 100 basis points or 1% to half of that at 50 basis points. That shift in expectation, in addition to the Federal Reserve upgrading their view on the economy, and decreasing what they thought unemployment would be, those all are what moved the mortgage market higher because of those expectations. Pretty much remember that whenever the economy is doing well, when inflation is tame and staying low, that is going to be bad for rates coming down. Stability might not be the worst thing in the world, but all that to say, if you continually holding your breath or your clients are holding their breath, waiting for 5% mortgage rates to come back, you might be waiting quite a while. So as I always say, there are 3 things that determine when it's a good time to buy a house. Can you qualify for the loan? Can you afford the monthly payment? Can you find the right house? And if you can do all those 3, get off the fence because you have no idea what's going to happen with rates. Nobody does. So get yourself, get your clients into a good situation. Next up, PCE, the Personal Consumption Expenditure Inflation Report. This came in up 0.1% for November. Half of expectations of 0.2. So that was some good news for mortgage rates today. Year over year, it rose from 2.3% to 2.4%, below expectations of the rise to 2.5%. And the core rate, which strips out food and energy prices, that remained stable year over year at 2.8% rather than the increase to 3% that was expected. So a little bit of good news today that hopefully should help interest rates decrease just a little bit after the damage we saw from from that Fed commentary. Next up, retail sales for the month of October rose 0.7%, which was above estimates of just 0.5% there. Last month's number was also revised higher to up 0.1%, so we really beat expectations by 0.3% this month. Again, decent amount higher there. Of that, a lot of that had to do with auto sales, which made up 0.3% of the total headline number of the total increase there. So auto prices moving up 0.3% just for the month alone. The core reading was up 0.4%, in line with estimates, in part because it strips out some of those prices. Next up, the industrial capacity report showed that production fell 0.1% for November. This is well below estimates that there was going to be growth of 0.3%, and October was also revised lower to -0.4%. Capacity utilization for industry fell from 77% to 76%. 76.8 when it was expected to go up to 77.3. This is the lowest number since April of 2021. Now what this really points to is as more factories are being underutilized, this can have a deflationary impact on the economy because there's more demand. If these capacities and factories are being overutilized, then there's more demand for facilities to be built. It's showing a lot of demand on them. So this reduced amount of demand, similar to our PPI or the wholesale inflation reports, might be a little of an indication of some potential relief into the future. So time will tell. And lastly here, existing home sales for the month of November rose 4.8% for the month to an annualized pace of 5.4— excuse me, 4.15 million units. This was a decent amount stronger than the expected 2.5% for the month, with sales now up 6.1% year over year. We kind of predicted that this would be the case because this is taking into account people who are buying or shopping in September and October when interest rates were lower. And so while this is still a better month, this is very much historically lower than an average of about 5 million units per year. So again, as rates continually change, we always get a delayed effect for the existing home sales reports because those are buyers who are shopping 1 to 2 months prior with the rates where they were. So right now, if rates continue to stay high like this, might see a bit of a dip in coming months' existing home sales numbers as well. As always, hopefully this is helpful. Thank you again so much for just continually watching, for your support, your friendship, getting a chance to work together with you. And if there's anything you need, let me know. Hope you have a phenomenal Christmas and an end of the year. I'll talk to you soon. Take care.
