Rocket Fuel Newsletter – 03/12/22

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$2.1 trillion over one decade. ... That’s not Aaron Rodgers’ new contract. That’s how much housing wealth middle-income households have gained in that time!

This week’s edition includes insight into the new-construction purchase market, a big week in the economic calendar and consumer sentiment toward home prices.

Fuel Up! 🚀

Biz Buzz  

Job openings remain high, but fewer workers considering leaving their current position.

Last week, the February BLS employment report exceeded expectations, reporting a 678,000-job increase from January and an unemployment rate of just 3.8%.

The January Job Openings and Labor Turnover Survey (JOLTS) was released Wednesday. Job openings were still elevated at historically high levels as hires and separations flattened. Voluntary separations (quits), however, slipped from 3.0% to 2.8% to start the year. A higher quits rate typically indicates workers feel confident in their ability to secure another position if desired. Nonetheless, the metric remained improved from readings this time last year. 

Despite global tensions and uncertainty, the U.S. is still poised for a recovery to pre-pandemic employment levels this year.

Consumer Price Index up big YoY.

The 2022 Winter Paralympics are coming to an end this week (click here for the current medal count) and so is this brief interlude of lower interest rates. With the U.S. CPI skyrocketing 7.9% year over year in February, the Fed is anticipated to raise the benchmark rates by 25 bps.  

Mortgage applications on the rise as rates drop.

After declining through all of February, total mortgage applications increased 8.5% during the first week of March amid a drop in mortgage rates for the first time in 12 weeks.

Lower mortgage rates supported a boost in both refinance and purchase activity, but purchase mortgage applications surpassed refinance applications for the second consecutive week. This trend is likely to continue through much of 2022, underscoring the importance of upping your brokerage’s purchase game this year.

A Tale Of Two Markets

The housing market remains hot at the start of the year with overall inventory dropping to a record low in January. 

However, a tale of two markets has begun to emerge, with existing homes falling solidly in the sellers' camp at 1.6 months' supply while new homes remain in a buyers' market at 6.1 months' supply. 

Homebuilders continue to remain busy trying to make up for a lack of existing homes on the market amid surging demand.

Prepare To Buy New

This divergence in housing appetite between existing and new is most noticeable when comparing the new homes as a share of total for-sale inventory and as a share of total sales. 

Existing homes, which tend to be less expensive, are flying off the shelves, while new homes are taking longer to sell.

New Housing Construction Is Not Dispersed Equally

Diving into new construction activity across housing markets reveals a profound impact, as new construction activity plays a key role in creating affordable housing solutions. 

A lack of adequate new supply to meet local demand, in large part thanks to overly restrictive zoning and other land use regulations, has discouraged builder activity and pushed up home prices to unsustainable levels in many markets.

The Flood (Of Real Estate Agents) Becomes A Shower

The lack of homes for sale is also having a direct impact on the real estate agent profession. As housing sales transactions slow due to pricing pressures and still-low inventory levels, the number of individuals entering the profession is also decelerating despite home prices (and commissions) rising.

In The Weeds Reads

  1. Fannie Mae National Housing Survey: More Consumers Expect Mortgage Rates And Home Prices To Rise Even Further
  2. Middle-Income Households Gain $2.1 Trillion In Housing Wealth In A Decade
  3. Single-Family Regional Growth Decelerates In Second Half Of 2021
  4. Construction Industry Adds 60,000 Jobs In February As Hourly Wages Post Steepest Rise Since 1982
  5. Why Do So Few People Buy Affordable Properties At Auction

TPO Travel

Rocket ProSM TPO leaders were back on the road this week, as Executive Vice President Austin Niemiec and Senior Vice President Mike Fawaz visited partners in and around Denver! 

Pro Puzzles

Our average solve time dropped by over a minute last week to 2:34! Ricardo de la Garza led all solvers with a 21-second time – great job, Ricardo!

Who will win this week?

Click here to solve this week’s crossword. Good luck!