Rocket Fuel Newsletter – 12/02/23

close up of male hands with newspaper and coffee

In this edition, we take a look at a record-breaking Thanksgiving weekend shopping coinciding with a minimal PCE increase 🤷. And in other Thanksgiving related news, Stache, the neatly trimmed Sealyham Terrier, took home Best In Show at the 2023 National Dog Show. 

Fuel Up! 🚀

PCE Data Supports Cooling Economy 
The Personal Consumption Expenditures (PCE) Price Index – one of the Fed’s favorite measures for inflation – rose 0.2% month-on-month and 3.5% year-on-year, in line with expectations. Markets reacted positively, taking this as another sign that the Fed Funds rate will stay where it is in the near term.

Record Number Of Deal-Seekers This Thanksgiving 
Despite decelerating PCE, holiday shoppers were out in record numbers this year. The National Retail Federation reported over 200 million consumers shopped Thanksgiving through Cyber Monday, passing last year’s record of 196.7 million. 

“Authentic” Takes 2023 Word Of The Year 
Merriam-Webster has named “Authentic” the top word of 2023. As generative AI continues to blur the line between fantasy and reality, many people are finding it harder to separate fake from legitimate. While tools like image generators and ChatGPT can certainly be used for good, they certainly make it more difficult to recognize what is truly “authentic.” 

Time to grab your coffee ☕ – there’s housing data to digest! 

There are a lot of moving pieces in the housing market, especially as the macroeconomic shocks from the global pandemic are still reverberating through the system. 

With the Federal Reserve raising interest rates faster than they have before, we’ve seen it become increasingly difficult for Americans to afford homes. 

While the borrowing cost is a key driver, so too is the nature of supply and demand. 

With folks demanding more square footage post-pandemic and the labor market maintain its strength, we’ve seen sales for new homes hold pace with pre-pandemic levels with interest rates twice as high and home prices starting at a much higher base. 

The “Lock-In Effect” has become a commonplace term as borrowers who hold their 2% – 3% mortgage are not looking to move and switch to a rate in the 7% – 8% range. 

In fact, our most recent existing home sales data shows fewer sales than the peak of the pandemic lockdown in May 2020. 

Builders have worked to fill this gap in supply and demand, but with material and labor costs also stubbornly high, not enough supply has made its way into the system. 

Though there are fewer new homes being sold than the same time last year, the pace still exceeds pre-pandemic levels.

The silver lining is that as sales of existing homes decline, the borrowers still in the market have more to choose from which starts to turn the market back in the favor of buyers. 

With recent reports showing listings increasing ~5% since last year and interest rates starting to drop as investors sense the Fed could be at the end of holding interest rates high, it’s beginning to look more optimistic for buyers out there. 

Fawaz and Vice President of Sales Chris Behrns skipped out on the sub-freezing temps in Michigan and traveled to California this week to meet with our good friends at West Capital Lending.

  1. FHA Announces 2024 Loan Limits
  2. New Residential Home Sales October 2023
  3. Federal Reserve Minutes Released From Their Last Meeting
  4. S&P Corelogic Case-Schiller Index: Home Prices
  5. November 2023 Federal Reserve Beige Book

Three solvers finished last week’s puzzle in less than a minute, led by an unnamed player at 28 seconds. Shoutout to Mike C (34 seconds) and Jim (39 seconds) for their great times. 

This week’s puzzle gets 3 Rockets out of 5. Click here to solve!