Morning! This is MF Lending - the fool-proof way to serve up mortgage and real estate market knowledge without any of the guesswork. So you’ll look like the smartest agent in the room (and you are!)

Here’s what we’ve got for you today:

1. Why rates fell this week 📉

2. “I’m ok…but everyone else isn’t” 🎥

3. Pending home sales report - July 📝

By the way, this article on Takeaways from Jackson Hole is the most clicked link in this newsletter, you should check it out if you are interested.

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Rates Today 📉

Why rates fell this week 📉

The Fed wants to see the economy slow down before they begin cutting interest rates.

Their ultimate goal is to bring inflation to 2%.

Increases in job losses, decreases in GDP and a decrease in consumer spending all contribute to the goal of slowing down the economy.

In today’s rate environment - bad news for the economy is good news for interest rates. Here is what has affected mortgage rates positively this week:

#1 - JOLTS Data (Tue 8.29) - Below Expectations

Job Openings and Labor Turnover Survey - this tells us how many job openings there are each month, how many workers were hired, how many quit their job, how many were laid off etc.

JOLTS - 8.827m (forecast 9.465m)

#2 - ADP Data (Wed 8.30) - Below Expectations

ADP (payroll company) reports on private-sector job growth. This report came in above forecasts for the last two months. But this month - job growth fell nearly 45% month-over-month and below forecasts.

ADP Growth - 177k (forecast 195k) - previous month 324k

#3 - GDP & Core PCE Growth - Below Expectations

GDP measures the value of final goods and services in the country. PCE tracks the consumer spending. Both came in below forecasts.

GDP - 2.1 (forecast 2.4) | PCE 3.7 (forecast 3.8)

#4 Jobless Claims (8.31) - Below Expectations

Jobless claims tracks new unemployment claims from the public (non-private) companies. This is a sign that the labor market is not cooling as quickly as the Fed wants.

Jobless claims - 228k (forecast 235k)

#5 Core PCE Inflation (8.31) - Met Expectations

Core PCE was exactly where forecasts were at .2

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The other big piece of the puzzle we get this week is the August Jobs report - coming out tomorrow morning 9.1.

Right now - while this economic data was a much-needed relief for mortgage rates, I do not anticipate the Fed changing course. The jobs data indicated that the labor market is not cooling as quickly as it should be.

We should see the Fed continue its plan of holding interest rates where they are in September. I think we are much too early to declare victory over inflation and start cutting. We should see rates hold in September.

“I’m ok…but everyone else isn’t” 🎥

Inflation is the most important thing out there in the minds of many consumers. People’s attitude toward the economy is getting worse when, in reality, inflation is improving. There seems to be some sort of disconnect between consumers and the data we are getting in weekly.

On top of this - even with falling confidence, consumer spending remains elevated. It feels like people continue to say 

“I’m ok…but everyone else is not” 🤔

Pending home sales report - July 📝

Pending homes sales index rose for the second consecutive month - up .9% in July.

Sales in the South and West were the main drivers with pending home sales in the South up 2.0%

Year-over-year we are still down 14%.

The Cul-de-Sac

Mark your GCal 📆

1. Sep 1st - Jobs Report

2. Sep 13th - CPI Print

3. Oct 13th - Taylor Swift Eras Tour in theaters 🍿

Thanks for reading - that is all we have for today 😎

Please forward this to your friends and colleagues if you found it valuable.

— Michael F DiLucchio