Initial Jobless Claims rose by 25,000 in the latest week, which was higher than expected, as 214,000 people filed for unemployment benefits for the first time. Continuing Claims also came in above forecasts, up 27,000 as 1.833 million people are still receiving benefits after filing their initial claim. 

What’s the bottom line? Initial Jobless Claims can be volatile from week to week, yet they remain relatively low on a historical basis, suggesting that employers are trying to hold on to workers. And while Continuing Claims have fallen from highs hit late last year, they are still elevated, especially when compared to September’s low of 1.658 million filers. This suggests it’s become harder for people to find employment once they are let go.

Pending Home Sales climbed 8.3% from November to December per the National Association of REALTORS® (NAR), coming in much higher than expected as the improvement in mortgage rates clearly sparked activity last month. Sales were also 1.3% higher than the level reported in December 2022.

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? NAR’s Chief Economist, Lawrence Yun noted that, “Home sales are projected to rise significantly in each of the next two years as the market steadily returns to normal sales activity.” He stressed that “increased supply will be essential to satisfying all potential demand.”

The Fed’s first meeting of 2024 begins Tuesday, with their Monetary Policy Statement and press conference coming on Wednesday. More housing news is also on deck Tuesday with an update on home price appreciation for November via Case-Shiller and the Federal Housing Finance Agency.

Labor sector data is also plentiful, starting with the JOLTS (job openings) report for December on Tuesday and January’s ADP Employment Report (which measures private payrolls) on Wednesday. The latest Jobless Claims will be reported on Thursday while Friday brings January’s Jobs Report from the Bureau of Labor Statistics, which includes Non-farm Payrolls and the Unemployment Rate.

New Home Sales, which measure signed contracts on new homes, rebounded in December, up 8% from November and beating forecasts as falling mortgage rates and the lack of existing homes for sale brought some buyers to the new construction market. Signed contracts were also 4.4% higher than they were in December 2022. 

What’s the bottom line? Alicia Huey, Chair for the National Association of Home Builders, confirmed that “the solid new home sales rate in December was fueled by a lack of existing inventory in the resale market and declining interest rates.” She added, “The rise in sales also coincides with our latest builder surveys, which show a marked increase in future sales expectations because of falling mortgage rates.”

February is National Chocolate Lovers Month! This Chocolate Mousse courtesy of the Food Network is a delicious treat for the chocolate lover in all of us.

Place 5 1/4 ounces of coarsely chopped bittersweet chocolate in a double broiler on a low simmer. Stir chocolate until melted, turn off heat and let stand. Add 14 ounces of cold heavy cream to a bowl and beat over ice until soft peaks form. Set aside and hold at room temperature.

With a mixer, whip 3 large egg whites to soft peaks. Gradually add 1 ounce sugar and whip until firm. Add chocolate to a large bowl and use a whisk to fold in egg whites. When egg whites are nearly fully incorporated, fold in the whipped cream.

Cover mousse and refrigerate for 1 hour until set. Serve in goblets topped with more whipped cream and shaved chocolate.

December’s Personal Consumption Expenditures (PCE) showed that headline inflation rose 0.2% for the month, with the year-over-year reading holding steady at 2.6%. Core PCE, the Fed’s preferred method which strips out volatile food and energy prices, also rose by 0.2% in December. The year-over-year reading fell from 3.2% to 2.9%, pushing this important metric below 3% for the first time in nearly three years!

What’s the bottom line? Inflation has made significant progress lower after peaking in 2022, with the headline reading at 2.6% (down from 7.1%) and the core reading at 2.9% (down from 5.6%). Plus, inflation is expected to decline even further this year, especially as some lagging components like falling shelter costs are better reflected in the reporting.

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. They did not hike at their September, November or December meetings, so they could continue to assess incoming inflation, labor sector and other economic data.

The Fed’s next meeting begins Tuesday and their Monetary Policy Statement and press conference on Wednesday could provide crucial hints regarding what’s ahead for rates this year.

Delight in National Blonde Brownie Day on January 22 with this decadent Chocolate Chip Blondie recipe courtesy of Taste of Home. Yields 3 dozen.

Preheat oven to 350 degrees Fahrenheit. Grease a 13×9-inch baking pan.

In a large bowl, combine 1 1/2 cups packed brown sugar, 1/2 cup melted butter, 2 large eggs (lightly beaten at room temperature), and 1 teaspoon vanilla until just blended. In a medium bowl, combine 1 1/2 cups all-purpose flour, 1/2 teaspoon baking powder, and 1/2 teaspoon salt. Add flour mixture to brown sugar mixture. Stir in 1 cup chocolate chips.

Pour batter into prepared dish and bake until a toothpick inserted in the center comes out clean, approximately 18 to 20 minutes. Cool on a wire rack before cutting into bars.

Retail Sales rose 0.6% from November to December, beating forecasts and coming in even stronger than the 0.3% gain seen in November. Sales were also up 5.6% when compared to December 2022.

What’s the bottom line? Spending at department stores, car dealerships, clothing stores and online boosted sales last month, giving some retailers a strong holiday season. While this data suggests a resilient economy, retailers likely lured shoppers with holiday discounts last month, so we’ll have to see if the strong level of spending continues this quarter. The Fed will be watching this data closely, as the strength of our economy will impact their monetary policy decisions.

Housing Starts fell for the first time in four months in December, down 4.3% from November. While single-family Starts also saw a downtick from November, they still had a “solid showing” per the NAHB as they surpassed the million mark (1.027 million) for the second straight month. This reflects the number of single-family homes that would be built throughout the year if construction took place at the same rate in every month as it did in December. Building Permits, which are an indication of future construction, were up 1.9% from November to December, with permits for single-family homes reaching their highest level in a year.

What’s the bottom line? “Mortgage rates steadily fell below 7% in December, and lower rates combined with a lack of existing inventory in most markets helped to keep single-family production above a one million-unit annual pace,” explained NAHB Chair Alicia Huey. “And the fact that our latest surveys showed a big increase in builder confidence is an indicator that we can expect housing starts to improve in the coming months.” 

A boost in supply will be welcome news for buyers around the country who have struggled with low inventory, though there is still a long way to go to meet the level of demand that exists among buyers. When we consider the pace of completed homes that will be coming to market (around 1.57 million homes annualized) and subtract roughly 100,000 homes that need to be replaced every year due to aging, we’re well below demand as measured by household formations that are trending at 1.9 million. More demand than supply will continue to be supportive of home values, especially when we reach the busier spring homebuying season.

Initial Jobless Claims declined by 16,000 in the latest week, with 187,000 people filing for unemployment benefits for the first time. Not only was this well below expectations, it was also the lowest reading since September 2022. Continuing Claims also fell by 26,000, with 1.806 million people still receiving benefits after filing their initial claim.

What’s the bottom line? Initial Jobless Claims data can be volatile at the start of a new year, as layoffs tend to decline around the holiday season. Yet the low number of first-time filers still suggests a tight labor market where employers are holding on to workers. And while Continuing Claims have fallen over the last few weeks, they are still elevated, especially when compared to September’s low of 1.658 million filers. This suggests it’s become harder for people to find employment once they are let go.

Confidence among home builders rose for the second straight month in January as falling mortgage rates have encouraged some buyers to resume their home search. The National Association of Home Builders (NAHB) Housing Market Index climbed seven points to 44, and while this is still in contraction territory below the key breakeven level of 50, the reversal marks a positive sign heading into the spring buying season.

All three index components moved higher this month. Current sales conditions rose seven points to 48, while future sales expectations surged twelve points to 57, moving into positive territory for the first time since August. Buyer traffic was also up five points to 29.

What’s the bottom line? NAHB Chair Alicia Huey noted that, “Lower interest rates improved housing affordability conditions this past month, bringing some buyers back into the market.” Plus, 31% of builders surveyed reported that they’re still reducing prices to encourage sales, providing even more opportunities for buyers right now.

Existing Home Sales fell 1% from November to December to a 3.78-million-unit annualized pace, coming in below estimates of an unchanged reading per the National Association of REALTORS® (NAR). Sales were also 6.2% lower than they were in December 2022.

What’s the bottom line? This report measured closings on existing homes in December and likely reflects people shopping for homes in October and November, when rates peaked. On that note, NAR’s Chief Economist, Lawrence Yun, said, “The latest month’s sales look to be the bottom before inevitably turning higher in the new year. Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.” More supply is certainly needed, as there were just 1 million homes available for sale at the end of December. This was down from 1.13 million at the end of November, and below healthy levels at just a 3.2 months’ supply of homes at the current sales pace.

Inflation rose 0.3% from November to December, per the Consumer Price Index (CPI). CPI also rose from 3.1% to 3.4% on an annual basis, though this is still near the lowest level in almost three years. Core CPI, which strips out volatile food and energy prices, increased 0.3% while the annual reading fell from 4% to 3.9%. This was the first time Core CPI fell below 4% in over two years!Rising costs for energy, used cars and motor vehicle insurance all contributed to the increase in inflation last month. High shelter costs were also a factor, though these have been moderating based on other reports, which should help inflation move even lower once the reporting catches up.

What’s the bottom line? Inflation has made significant progress lower after peaking in 2022, with the headline reading now at 3.4% (down from 9.1%) and the core reading at 3.9% (down from 6.6%).

Remember, the Fed began aggressively hiking the Fed Funds Rate (the overnight borrowing rate for banks) in March 2022 to try to slow the economy and curb runaway inflation. Following eleven hikes in this cycle, the Fed pressed pause at their last three meetings in 2023, as signs of cooling inflation grew.

Will the progress we’ve seen on inflation be enough for the Fed to shift from rate hikes to rate cuts later this year, as many economists expect?

Sunday, January 21 marks National Granola Bar Day. This homemade version from the Food Network makes for an easy and delicious afternoon snack or breakfast on the go. Yields 48 bars.

Preheat oven to 325 degrees Fahrenheit. Line a 15×10-inch rimmed baking sheet with foil and coat with cooking spray.

In a large bowl, mix 2 1/2 cups rolled or quick-cooking oats, 1 cup dry roasted peanuts, 1/2 cup raisins, 1/2 cup cranberries, 1 cup sunflower seeds, 1 1/2 teaspoons cinnamon, 1 14-ounce can sweetened condensed milk, and 1 stick melted unsalted butter. Spread evenly on the baking sheet and bake until golden, approximately 45 minutes.

Cool slightly, then use the foil to lift off baking sheet and invert onto a cutting board. Peel off foil, cut into bars, and wrap individually in plastic wrap.

“Home price appreciation continued to push forward in November, despite the new highs in mortgage rates seen over the year,” per CoreLogic’s Chief Economist, Dr. Selma Hepp. Their Home Price Index showed that home prices nationwide rose 0.2% from October to November, hitting a new all-time high for the seventh straight month. Prices were also 5.2% higher than in November 2022.

CoreLogic forecasts that home prices will fall 0.2% in December and rise 2.5% in the year going forward, though their forecasts tend to be on the conservative side historically. In fact, CoreLogic’s index is on pace for 7% appreciation in 2023, based on the readings for the first eleven months of last year.

What’s the bottom line? The latest rise in home prices reported by CoreLogic echoes the strong growth seen by other major indices like Case-Shiller and the Federal Housing Finance Agency. These reports continue to demonstrate why homeownership remains a good opportunity for building wealth through real estate.