Pending Home Sales fell 4.9% from December to January per the National Association of REALTORS® (NAR), coming in below expectations. Sales were also 8.8% below the level reported in January 2023. Pending Home Sales measure signed contracts on existing homes, making them an important forward-looking indicator for closings as measured by Existing Home Sales.

What’s the bottom line? “The job market is solid, and the country’s total wealth reached a record high due to stock market and home price gains,” said NAR Chief Economist Lawrence Yun. “This combination of economic conditions is favorable for home buying. However, consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales.”

New Home Sales, which measure signed contracts on new homes, were up 1.5% from December to January, marking the second consecutive month sales increased. Signed contracts were also 1.8% higher than they were in January 2023.

What’s the bottom line? January’s modest increase wasn’t as large as economists had forecasted, as frigid temperatures around much of the country likely kept some potential buyers home last month.

However, demand for new construction remains strong due to the persistent shortage of existing homes for sale. On that note, more “available” supply is needed to meet buyer demand, especially as we head into the busy spring homebuying season. While there were 456,000 new homes available for sale at the end of January, slightly higher than the 452,000 seen in the previous report, only 80,000 were completed, with the rest either under construction or not even started yet.

January’s Personal Consumption Expenditures (PCE) showed that headline inflation rose 0.3% for the month, with the year-over-year reading falling from 2.6% to 2.4%. Core PCE, the Fed’s preferred method which strips out volatile food and energy prices, rose by 0.4% monthly. The year-over-year reading fell from 2.9% to 2.8%, pushing this important metric one step closer to the Fed’s 2% target and its lowest level in almost three years!

These PCE readings were in line with expectations, which was welcome news after previous inflation reports for January (Consumer and Producer Price Indexes) were hotter than expected. Though the hot 0.4% monthly reading for Core PCE is something to keep an eye on. Was this a one-off or the start of a trend?

What’s the bottom line? The Fed has been working hard to tame inflation, hiking its benchmark Fed Funds Rate (which is the overnight borrowing rate for banks) eleven times between March 2022 and July 2023. These hikes were designed to slow the economy by making borrowing more expensive, lowering the demand for goods, and thereby reducing pricing pressure and inflation.

Inflation has moved lower after peaking in 2022, with the headline reading at 2.4% (down from 7.1%) and the core reading at 2.8% (down from 5.6%). Fed Chair Jerome Powell has stressed that while the Fed is “committed to returning inflation to 2% over time,” Fed members won’t “wait to get to 2% to cut rates.”

The question remains: When will the Fed think inflation has moved low enough for them to start cutting the Fed Funds Rate later this year?

Applications for new unemployment benefits rose by 13,000 in the latest week, as 215,000 Initial Jobless Claims were filed. Continuing Claims also rose 45,000, with 1.905 million people still receiving benefits after filing their initial claim.

What’s the bottom line? While Initial Jobless Claims are still relatively low, Continuing Claims have been trending higher, with this latest reading the second highest since November 2021. The data shows that employers are still trying to hold on to workers, but once people are let go it’s more challenging for them to find new employment.

Delight family and friends with this light and buttery Pound Cake courtesy of Allrecipes, perfect for snacks, dessert and marking National Pound Cake Day on March 4.

Preheat oven to 325 degrees Fahrenheit. Grease and flour a bundt pan.

In a large mixing bowl, cream 3 1/4 cups sugar and 3 sticks (1 1/2 cups) unsalted butter (room temperature) on medium speed until light and fluffy, around 5 minutes. Add 6 extra large eggs, 1 at a time, beating for 45 seconds after each addition. Add 2 teaspoons vanilla extract and beat for 30 seconds.

In a medium bowl, combine 3 cups all-purpose flour, 1/2 teaspoon baking powder, 1/2 teaspoon salt and 1/4 teaspoon nutmeg. Add half the flour mixture to the butter mixture and mix on low speed until just blended. Add 1/2 cup milk and beat on low until just blended. Repeat with remaining flour mixture and another 1/2 cup of milk. Scrape the sides of the bowl with a spatula between each addition.

Pour batter into prepared dish, smoothing top with a spatula. Bake until a toothpick inserted in the center comes out clean and the cake is just starting to pull away from the sides of the pan, around 1 hour and 25 minutes. Cool for 15 minutes before inverting the cake onto a plate. Cool completely before serving.

Existing Home Sales rose 3.1% from December to January to a 4-million-unit annualized pace, with December’s sales also revised higher per the National Association of REALTORS® (NAR). When compared to January 2023, sales were down 1.7%.

What’s the bottom line? This report measures closings on existing homes in January and likely reflects people shopping for homes in November and December, when rates backed off from their peak. NAR’s Chief Economist, Lawrence Yun, added that “listings were modestly higher, and home buyers are taking advantage of lower mortgage rates compared to late last year.”

Any increase in listings is a positive sign for much needed supply. There were just 1.01 million homes available for sale at the end of January, which is below healthy levels at just a 3 months’ supply of homes at the current sales pace. Meanwhile, demand for homes remains strong, with Yun adding that “multiple offers are common on mid-priced homes, and many homes were still sold within a month.”

This ongoing dynamic of tight supply and strong demand is a key reason why home values continue to rise and why now provides great opportunities to take advantage of appreciation gains.

Chocolate and peanut butter make for a perfect pair, and these Chocolate Peanut Butter Balls from the Food Network are the perfect way to mark National Peanut Butter Lovers Day on March 1. Yields 24.

In a large bowl, beat 1 cup confectioners’ sugar, 1/2 cup creamy peanut butter, 2 tablespoons unsalted butter (room temperature), 1 teaspoon vanilla extract and 1/4 teaspoon kosher salt with an electric mixer until combined and smooth. Roll the mixture into 24-equal sized balls (about 1 teaspoon each) and place them on a small baking sheet. Chill in the freezer until firm, about 15 minutes.

Heat 6 ounces of roughly chopped bittersweet chocolate and 2 tablespoons unsalted butter in a microwave safe bowl in 20 second intervals, stirring between each with a rubber spatula until melted and smooth.

Using two forks, dip each peanut butter ball into the melted chocolate. Coat evenly and tap off any excess chocolate. Place balls back onto the baking sheet and chill in the refrigerator until chocolate is firm and set, about 1 hour. Serve chilled and refrigerate any extras in an airtight container.

The minutes from the Fed’s January meeting showed that members were generally optimistic that their policy moves had succeeded in lowering inflation. Members also felt they had reached their peak Fed Funds Rate for this cycle.

The Fed Funds Rate is the interest rate for overnight borrowing for banks and it is not the same as mortgage rates. The Fed’s eleven hikes between March 2022 and July 2023 were made to slow the economy and curb the runaway inflation seen over the last few years.

What’s the bottom line? Fed members want to see more data before they ease monetary policy, and they don’t expect to begin cutting rates until they have “gained greater confidence that inflation is moving sustainably toward 2 percent.” This cautious approach from January’s meeting has been echoed more recently by several Fed members, including Philadelphia Fed President Patrick Harker and Fed Governor Christopher Waller.

Note that the Fed’s favored inflation measure, Core Personal Consumption Expenditures (PCE), declined to 2.9% annually as of the latest report for December. January’s PCE report will be released this Thursday, and it will be especially important to monitor the latest numbers after both the Consumer and Producer Price Indexes reported hotter than expected inflation for last month.

The latest New and Pending Home Sales reports will give us an update on signed contracts for January when they’re released on Monday and Thursday, respectively. We’ll also get appreciation data for December from Case-Shiller and the Federal Housing Finance Agency on Tuesday.

Look for the second reading for fourth quarter 2023 GDP on Wednesday, while Thursday brings the latest Jobless Claims and likely the biggest news of the week via the Fed’s favored inflation measure, Personal Consumption Expenditures.

Initial Jobless Claims, which measures the number of people filing new unemployment claims, declined by 12,000 to 201,000 in the latest week. Continuing Claims also fell by 27,000, with 1.862 million people still receiving benefits after filing their initial claim.

What’s the bottom line? Initial Jobless Claims are still relatively low, while Continuing Claims have been trending higher since reaching a low of 1.658 million in September. The dynamic we’ve been seeing in the labor sector continues, where employers are trying to hold on to workers, but once people are let go it’s more challenging for them to find new employment.

Note that this was an important real-time report because it includes the sample week that the Bureau of Labor Statistics will use in the modeling for their job growth estimates for February’s Jobs Report. Could the low number of initial unemployment claims skew the headline job growth number in a higher direction?

The Fed is also closely watching employment data as they continue to weigh monetary policy. Members will be carefully analyzing the headline job growth figure when February’s Jobs Report is released on March 8.

The Conference Board released their latest Leading Economic Index (LEI), which is a forward-looking index that takes a broad look at the economy and tracks where it’s heading in the near term. January brought a 0.4% drop, marking the 22nd consecutive month of declines. The last time the index fell 22 straight months was in 2007 to 2009, during the global financial crisis.

What’s the bottom line? Despite January’s decline, the Conference Board softened their tone on recession expectations. Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, explained, “While the declining LEI continues to signal headwinds to economic activity, for the first time in the past two years, six out of its ten components were positive contributors over the past six-month period (ending in January 2024). As a result, the leading index currently does not signal recession ahead.”

Sentiment among home builders rose for the third straight month in February, reaching the highest level since last August per the National Association of Home Builders (NAHB). Their Housing Market Index climbed four points to 48 and while this is still in contraction territory, the reading is just shy of the key breakeven level of 50. Any score over 50 on this index, which runs from 0 to 100, signals that more builders view conditions as good than poor.

All three index components posted gains this month, with current and future sales expectations now both in expansion territory while buyer traffic also moved higher.

What’s the bottom line? NAHB Chair Alicia Huey noted that pent-up demand should result in more buyers entering the market if mortgage rates continue to decline this year, and this expectation was one factor that helped builder confidence improve. The NAHB also pointed to the lack of existing home inventory and the prospect of future rate cuts by the Fed as additional reasons why builders were feeling more positive this month.

The latest Consumer Price Index (CPI) showed that inflation rose 0.3% from December to January, coming in hotter than economists had expected. On an annual basis, CPI fell from 3.4% to 3.1%, not quite as low as forecasted but still a move in the right direction.

Core CPI, which strips out volatile food and energy prices, increased 0.4% while the annual reading remained at 3.9%. Both figures were slightly higher than estimates.

Rising shelter, motor vehicle insurance and medical care service costs helped push inflation higher last month. However, shelter costs have been moderating based on other reports, which should help inflation cool further once the reporting catches up.

What’s the bottom line? Even though the latest inflation numbers were hotter than expected, inflation has made significant progress lower after peaking in 2022. The headline reading is now at 3.1% (down from 9.1%), while the core reading is at 3.9% (down from 6.6%).

Housing Starts hit a five-month low in January, down a sharp 14.8% from December. While the bulk of the decline was in multi-family projects, single-family starts also ticked lower. 

However, the NAHB predicts that “single-family starts will rise about 5% this year,” per their Chief Economist, Robert Dietz, and there are already signs to support this forecast. Single-family Building Permits (which reflect future construction) were at their highest level in a year, up a whopping 35.7% when compared to January 2023.

What’s the bottom line? “Moderating mortgage interest rates in 2024 will ultimately lead to gains for single-family home building this year,” said NAHB Chair Alicia Huey.

Given the persistent low supply of available homes for sale, more inventory is welcome news for buyers around the country, though there is still a long way to go for supply to catch up with demand. The pace of completed homes that will be coming to market is now around 1.4 million homes annualized, and then we must subtract roughly 100,000 homes that need to be replaced every year due to aging. This puts us well below demand as measured by household formations that are trending at almost 1.7 million as of the end of December.

More demand than supply will continue to be supportive of home values, especially if mortgage rates decline during the busier spring homebuying season.

This Homemade Salsa courtesy of Delish makes the perfect accompaniment for National Tortilla Day on February 24. Yields 10 servings.

Preheat oven to 400 degrees Fahrenheit. On a large baking sheet, toss 1 white onion (quartered), 2 jalapeno peppers (stems removed, halved lengthwise), and 2 cups cherry tomatoes (halved) in one tablespoon olive oil. Season with salt and pepper. Roast until vegetables are slightly charred, about 20 minutes.

Transfer onion mixture to a food processor. Add 3 heirloom tomatoes (quartered), 3 cloves garlic, 1/2 cup fresh cilantro leaves, juice of 1 lime, 1/2 teaspoon ground cumin, and a pinch of crushed red pepper flakes. Season with additional salt and pepper to taste. Pulse several times until salsa is mostly blended but still slightly chunky.

Add salsa to a serving bowl and enjoy with your favorite tortilla chips.