Growth and Thoughts about Real Estate

The Federal Reserve's preferred measure of inflation indicates a gradual decrease in annual inflation. Despite January's impact on signed home contracts due to weather and mortgage rate fluctuations, key home price indexes highlight another robust year for appreciation. Here are the key headlines:

1. Fed's Favored Inflation Measure Aligns with Predictions
   In January, the Personal Consumption Expenditures (PCE) revealed a 0.3% monthly increase in headline inflation, with the year-over-year reading dropping from 2.6% to 2.4%. The core PCE, excluding volatile food and energy prices, saw a 0.4% monthly rise, bringing the year-over-year figure down from 2.9% to 2.8%. These results, in line with expectations, follow hotter-than-expected inflation reports for January, prompting scrutiny over whether the 0.4% monthly increase in Core PCE is a singular event or the beginning of a trend. The Fed's efforts to curb inflation through eleven consecutive rate hikes between March 2022 and July 2023 have contributed to the decline in inflation.

2. New Home Sales Surge in January
   New Home Sales, reflecting signed contracts for new homes, increased by 1.5% from December to January, marking the second consecutive month of growth. Despite the rise, the modest increase fell short of economists' forecasts, possibly influenced by frigid temperatures deterring potential buyers. Strong demand for new construction persists due to the scarcity of existing homes for sale. However, more supply is needed to meet growing buyer demand, especially as the spring homebuying season approaches.

3. Pending Home Sales Experience a Downturn
   Pending Home Sales declined by 4.9% from December to January, falling below expectations. Sales were also 8.8% lower than the reported level in January 2023. This decline in signed contracts for existing homes serves as a forward-looking indicator for future closings. Lawrence Yun, NAR Chief Economist, attributes the dip to consumers' heightened sensitivity to changes in mortgage rates.

4. Home Values Continue Ascending
   The Case-Shiller Home Price Index and the Federal Housing Finance Agency's House Price Index both indicate a rise in home prices from November to December. The Case-Shiller Index shows a 0.2% increase and a 5.5% year-over-year growth, while the FHFA Index reports a 0.1% monthly increase and a 6.6% year-over-year rise. The data underlines a strong year for appreciation in 2023, emphasizing the wealth-building potential of homeownership.

5. Unemployment Claims Increase
   Applications for new unemployment benefits rose by 13,000 in the latest week, with 215,000 Initial Jobless Claims filed. Continuing Claims also increased by 45,000, with 1.905 million individuals still receiving benefits after their initial claim. Although Initial Jobless Claims remain relatively low, Continuing Claims have been on an upward trend, indicating challenges for job seekers in finding new employment after being let go.

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Just a friendly reminder that Daylight Saving Time is almost upon us! This Sunday, March 10th, we will "spring forward" and gain an extra hour of daylight in the evenings.

We've got some useful tips to help you adjust to the time change seamlessly.

• Start by gently altering your sleep schedule - try going to bed and waking up 15 minutes earlier each day leading up to the switch. This will help your body clock adjust without the grogginess.

• Why not make your mornings brighter? Open your curtains or blinds and let the natural light in! This can help reset your internal clock and boost your mood for the day ahead.

• And with more daylight in the evenings, it's the perfect opportunity to enjoy some outdoor activities. Take a relaxing walk in the park, enjoy a fun bike ride, or plan a picnic. Make the most of these extra hours!

• Don't forget, this is also a great time to check your smoke alarms and replace batteries if needed. Safety always comes first!

• Lastly, celebrate the change! Gather your friends and family for a cozy backyard BBQ or a simple get-together. It's a wonderful opportunity to connect and create lasting memories.

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