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Morning Report: Housing affordability improved in Q1


Vital Statistics:

Stocks are flattish this morning after we round out a week with limited economic data and no Fed-speak. Bonds and MBS are flat as well.

Another slow news day.

Housing affordability improved in the first quarter of 2023, however affordability issues remain, according to the NAHB. This was driven by wage growth, with flattish home price growth and a decline in mortgage rates. Given the shortage of skilled labor and cost of building materials, new construction will have a limited effect on affordability, which means that wage growth will have to do the heavy lifting here.

Household net worth increased to $148.835 in the first quarter of 2023, according to the Federal Reserve. Meanwhile, assets held by the Federal Reserve banks fell to just under $8.4 trillion. The Fed has reduced its balance sheet by some $500 billion since it started QT in March of 2022. It had tried QT before in 2018, and reduced its balance sheet by $700 billion before problems in the repo market caused it to halt the process.

The Atlanta Fed’s GDP Now Index sees 2.2% growth in Q2. This is surprising given that the ISM data has been pretty weak for manufacturing and the services economy seems to be decelerating as well. Global growth has been downgraded by the IMF, and China is struggling with deflation. Reports Weekly Active Inventory Up 13% YoY; New Listings Down 25% YoY

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