Existing Home Sales, which measures closings on existing homes, rose 1.3% in July to an annualized pace of 3.95M units, which was in line with market estimates and broke a four-month losing streak. Sales were down 2.5% year over year.

This report likely measured people shopping for homes in May and June, when rates were above 7%.  Rates have since come down, which we believe will lead to more sales in the upcoming reports.

Inventory increased 0.8% month over month to 1.33M units.  Inventory is now up 20% year-over-year, but it’s important to note that there is a seasonality to inventory and we always see inventory move up and peak around this time of the year, then begin to fall.

Based on the increased pace of sales, even with the increase in inventory, there is a four months’ supply of homes, which is down from 4.1 in the previous report and below a more normal market’s 4.6 months’ supply.

Homes remained on the market for 24 days on average, up from 22 days in June but this metric has been trending lower.  In May, homes were on the market for an average of 24 days, less than the 26 days seen in April and 33 days in March.  We also saw 24% of homes sold above the list price, down from 29% in the previous report but showing that there are still bidding wars in about a quarter of home sales nationwide.

The median home price was $422,600, down 1% from last month but up 4.2% from last year.  First-time homebuyers accounted for 29% of sales, which was unchanged.  Cash buyers accounted for 27% of sales, down from 28% in the previous report, while Investors made up 13%, down from 16%.

What’s the bottom line? The number of closings increased in July and some of the internals within the report point to demand remaining strong even in the face of elevated rates. Homes remained on the market for a short period, an average of 24 days in July.

Fed Chair Jerome Powell spoke at the Jackson Hole Economic Symposium on Friday.  His speech was definitely dovish as he confirmed a September 18 rate cut.  Powell said, “the time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

While he was non-committal on the size of a cut, the market liked the confirmation that policy is changing and will begin to be less restrictive.  Powell explained that inflation has declined significantly, and his confidence has grown that inflation is headed on a path to 2%.  He also said that upside risks to inflation have diminished, while downside risks to unemployment have increased. Clearly, the Fed is more concerned with the labor market versus inflation now.

On the labor market, Powell said that conditions are less tight than pre-pandemic when inflation was below 2%, meaning that the labor market would not be a source of inflation.

What’s the bottom line? The Fed Futures continues to price in a 100% change of a 25bp cut in September, with a 33% chance of 50bp.  The market is putting a 73% chance of 100bp of cuts by year end, which would mean there has to be a 50bp cut at one of the next three meetings.  The market is also pricing in another 125bp of cuts in 2025, which would be 225bp in total between this year and next and bring the Fed Funds rate down to 3.125%, which would still be above inflation.

August 24 is National Waffle Day, and this recipe courtesy of the Food Network makes for a delicious breakfast treat. Yields 8 waffles.

Preheat waffle iron to the regular setting. In a large bowl, sift together 2 cups all-purpose flour, 1/4 cup sugar, 1 tablespoon baking powder, and 1/2 teaspoon salt. In a separate bowl, whisk together 1 1/2 cups milk, 1 tablespoon vanilla extract and 2 egg yolks. Pour the wet ingredients over the dry ingredients and stir gently until halfway combined. Melt 1 stick of salted butter and pour into mixture; continue mixing until combined.

Beat 4 egg whites until stiff and slowly fold them into the batter. Add batter to waffle iron and cook waffles in batches until they are a deep golden color and crisp. Serve immediately with butter, warm syrup and your favorite fruit topping.

Initial Jobless Claims fell 7,000 in the latest week, with 227,000 people filing for unemployment benefits for the first time. Continuing Claims fell by 7,000, as 1.864 million people are continuing to receive benefits after filing their initial claim.

What’s the bottom line? Though both Initial and Continuing Claims fell last week, Continuing Claims are backing off the highest level in almost three years. This shows that once laid off, it’s harder to get back to work.

Retail Sales rose 1% in July, above the 0.3% increase the market was expecting. Sales in June were downwardly revised from 0% to -0.2%, which slightly tempers the July gain. The Core reading, which gets plugged into GDP, rose 0.3%, which was 0.2% above estimates. Sequentially, it has moderated from a 0.9% increase in June but this was also a beat and may lead to some higher GDP estimates.

What’s the bottom line? This Retail Sales release marks another report where the Core reading came in above estimates, which may lead to stronger GDP estimates down the line.

There was more positive news as the Producer Price Index (PPI), which measures inflation on the wholesale level, was also lower than expected in July. Headline PPI rose 0.1% last month, with the annual reading falling from 2.7% all the way down to 2.2%. Core PPI, which strips out volatile food and energy prices, was flat for the month and the year-over-year reading also saw a big drop from 3% to 2.4%.

What’s the bottom line? Wholesale inflation was much cooler than economists had forecasted, and the Bond market reacted favorably when the data was released last Tuesday. This positive trajectory lower is also important because some of the PPI components are factored into another important consumer inflation measure called Personal Consumption Expenditures (PCE), which is the Fed’s favored measure. This bodes well for a friendly PCE report when that data is released on August 30.

Plums are in season and this Honey Plum Parfait courtesy of Allrecipes makes for a light and refreshing breakfast. You can also substitute the Greek yogurt for frozen yogurt or ice cream to enjoy a delicious dessert. Yields 2 servings.

Pit and chop 2 plums. In a large bowl, combine the plums, 2 tablespoons chopped almonds, 2 tablespoons orange juice, 1 tablespoon honey, 1 teaspoon minced fresh ginger and 1 teaspoon ground cardamom.

In a parfait cup, add 1 scoop of Greek yogurt and top with 1 scoop of the plum mixture. Top with an additional scoop of yogurt and plum mixture.

After hitting the highest level of the year, Initial Jobless Claims fell 17,000 in the latest week, with 233,000 people filing for unemployment benefits for the first time. Continuing Claims rose by 6,000, as 1.875 million people are continuing to receive benefits after filing their initial claim.

What’s the bottom line? Both Initial and Continuing Claims have trended higher this summer when compared to the start of the year, with Continuing Claims topping 1.8 million each week since the start of June. This shows that the pace of layoffs over the last two months has picked up at the same time employers have slowed down hiring. This sentiment was echoed by ZipRecruiter last week during their second quarter earnings call. Cofounder and CEO Ian Siegel explained, “As we look toward the second half of 2024, we continue to navigate challenging labor market conditions. Per the Bureau of Labor Statistics, seasonally adjusted hires have declined every month on a year-over-year basis since August of 2022. The quit rate has fallen 9% below the average rate in 2019.” The data combined suggests we are seeing a steady weakening in the labor market.

Active listings in July rose 5.3% from June and are now up 37% when compared to a year ago. While some media reports have claimed that the increase in inventory could lead to a housing crash, analyzing the figures in context is crucial. The increases we saw last month are from very low levels, as active listings are still down almost 30% from the pre-pandemic totals seen in July of 2019. The inventory build we have seen this year has also been very concentrated, as there are only four states (Texas, Idaho, Florida, and Tennessee) with higher inventory levels than five years ago. This is compared to some parts of the Northeast, where active listings are down 65% to 75% over that same period. In addition, seasonal inventory building into the summer months is a normal pattern that we see every year. This is mainly due to children and schools, as parents like to have their move done before the start of the school year.

What’s the bottom line? Inventory is still tight comparatively and will likely start to decline heading into the fall due to the normal seasonality we see each year. Demand is also likely to rise when rates come down further. Overall, this situation remains supportive of home prices.

CoreLogic’s Home Price Index showed that home prices nationwide rose 0.3% in June after rising 0.6% in May, 1.1% in April and 1.2% in March, as appreciation gains are slowing but remain strong. Prices are also 4.7% higher when compared to June of last year. CoreLogic forecasts that home prices will rise 0.3% in July and 2.3% in the year going forward, though their forecasts tend to be conservative. ICE (formerly known as Black Knight) also reported that national home values rose 0.2% in June after seasonal adjustment, with their index showing that prices are 4.1% higher than a year ago.

What’s the bottom line? CoreLogic and ICE are not alone in their reporting, as home price gains have also been seen in other major indexes from Case-Shiller and the Federal Housing Finance Agency. These reports show that housing still proves to be a great investment for wealth creation.

Mortgage Bonds surged higher last week on the heels of friendly inflation and weak job data, ending Friday above the ceiling of resistance at 101.76. The 10-year broke beneath 4% last Thursday, which is meaningful from a psychological standpoint, and moved lower still on Friday, ending the week down near the next floor at 3.78%.

It’s National Peach Month and this easy and delicious Peach Crisp from Allrecipes is a perfect choice for a summertime dessert. Yields 8 servings.

Preheat oven to 350 degrees Fahrenheit. Evenly arrange 4 cups sliced peaches in an 8×8-inch baking dish. Mix 1/2 cup all-purpose flour, 1/2 cup brown sugar, 1/2 cup cold butter, 1 teaspoon cinnamon, and 1/4 teaspoon salt in a bowl using a pastry cutter until crumbly. Fold 1 cup rolled oats into flour mixture.

Sprinkle topping evenly over peaches, pressing down lightly. Bake until crispy and golden brown on top, around 30 minutes. Serve warm, topped with your favorite vanilla ice cream.