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Relief checks live updates: COLA 2023, mortgages, social security payments, housing market, December jobs report

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US labor market powers ahead, but wage growth loses steam

The US economy added jobs at a solid clip in December, pushing the unemployment rate back to a pre-pandemic low of 3.5% as the labor market remains tight, but Federal Reserve officials could draw some solace from a moderation in wage gains.

Still, the US central bank’s fight against inflation is far from being won. The Labor Department’s closely watched employment report on Friday also showed household employment rebounding by a whopping 717,000 jobs last month.

Recent declines in household employment had fanned speculation that nonfarm payrolls, the main measure of employment gains, were overstating job growth.

Labor market resilience, despite the Fed embarking last March on its fastest interest rate-hiking cycle since the 1980s, is underpinning the economy by sustaining consumer spending. It, however, raises the risk the Fed could lift its target interest rate above the 5.1% peak it projected last month and keep it there for a while.

“The labor market remains resilient but is losing pep and worker shortages remain intense,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “While wage growth has moderated, it’s still far from consistent with price stability. Don’t look for the Fed to ratchet down its hawkish talk or slow the pace of rate hikes on February 1.”

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Home sales tumbled in November

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Sales of existing homes fell 7.7% in November compared with October, according to the National Association of Realtors.

The seasonally adjusted annualized pace was 4.09 million units. That is weaker than the 4.17 million units housing analysts had predicted, and it was a much deeper fall than usual monthly declines.

Sales were down 35.4% year over year, marking the tenth straight month of declines. That was the weakest pace since November 2010, with the exception of May 2020, when sales fell sharply, albeit briefly, during the early days of the Covid pandemic. In November 2010, the nation was mired in the great recession as well as a foreclosure crisis.

These counts are based on closings, so the contracts were likely signed in September and October, when mortgage rates last peaked before coming down slightly last month. Rates are now about one percentage point lower than they were at the end of October, but still a little more than twice what they were at the start of this year.

“In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the Covid-19 economic lockdowns in 2020,” said Lawrence Yun, NAR’s chief economist. “The principal factor was the rapid increase in mortgage rates, which hurt housing affordability and reduced incentives for homeowners to list their homes. Plus, available housing inventory remains near historic lows.”

Read more: Mortgage refinance demand surged 6% last week

At the end of November there were 1.14 million homes for sale, which is an increase of 2.7% from November of last year, but at the current sales pace it represents a still-low 3.3 month supply.

Low supply kept prices higher than a year ago, up 3.5% to a median sale price of $370,700, but those annual gains are shrinking fast, well off the double digit gains seen earlier this year. It is still the highest November price the Realtors have ever recorded, and, at 129 straight months, it is the longest running streak of year-over-year price gains since the realtors began tracking this in 1968. Roughly 23% of homes sold above list price, due to tight supply.

“We have seen home prices come down from their summer peaks over the past five months. At the same time, we have also seen rent growth retreat for 10 consecutive months,” wrote George Ratiu, senior economist at Realtor.com in a release. “However, the cost of real estate remains challenging for many households looking for a place to call home, especially as high inflation and still-elevated interest rates have been eroding purchasing power.”

Sales decreased in all regions but fell hardest in the West, where prices are the highest, down nearly 46% from a year ago.

Homes sat on the market longer in November, an average 24 days, up from 21 days in October and 18 days in November 2021. Despite the slower market, 61% of homes went under contract in less than a month.

With prices still high and mortgage rates hitting a cyclical peak, first-time buyers remained on the sidelines. They were responsible for 28% of sales in November, which was unchanged from October, and up slightly from 26% in November 2021. Historically first-time buyers make up about 40% of the market. A separate survey from the Realtors put the annual share at 26%, the lowest since they began tracking.

Sales fell across all price categories, but took the steepest dive in the luxury million-dollar-plus category, dropping 41% year-over-year. That sector had seen the biggest gain in the first years of the pandemic.

Mortgage rates have come off their recent highs, but it remains to be seen if it will be enough to offset higher prices.

“The market may be thawing since mortgage rates have fallen for five straight weeks,” Yun added. “The average monthly mortgage payment is now almost $200 less than it was several weeks ago when interest rates reached their peak for this year.”

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Mortgage rates drop after CPI inflation report

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A prospective home buyer, left, is shown a home by a real estate agent in Coral Gables, Florida.

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The average rate on the 30-year fixed mortgage dropped to 6.28% Tuesday, according to Mortgage News Daily. It is now at the lowest level since mid-September.

The decline came after a lower-than-expected reading of the November’s consumer price index, a widely watched measure of inflation. The report sent investors rushing into U.S. Treasury bonds, causing yields to drop. Mortgage rates follow loosely the yield on the 10-year Treasury.

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“The second consecutive month of reassuring CPI data continues to build a case that inflation has turned a corner, but rates will be careful about reading too much into that potential shift given the volatility of the data in recent months,” said Matthew Graham, chief operating officer at Mortgage News Daily. “The bond market will also want to see what the Fed does with this info in tomorrow’s updated Fed rate forecasts in the dot plot.”

Mortgage rates began rising at the start of this year and accelerated in the spring and summer, with the 30-year fixed going from around 3% to well over 7% by the end of October. That sent the housing market into an early deep freeze. Sales of existing homes have fallen for nine straight months and were down 24% in October year-over-year, according to the latest read from the National Association of Realtors.

But rates then fell sharply in November, after the CPI report for October indicated that inflation was cooling. The rate ended November at 6.63%. Some suggested, albeit cautiously, that the drop in rates might be bringing buyers back to the market.

“There are some very very modest green shoots over the last few weeks, as rates have come down, but I am not ready to get sucked back into the conversation we had in August when we felt better,” Doug Yearley, CEO of luxury homebuilder Toll Brothers, said on the company’s quarterly earnings call with analysts last week. Yearly was referring to a very brief rate drop in August.

Redfin reported homebuyer demand “has started ticking up” in November. It’s demand index, which measures requests for home tours and other homebuying services from Redfin agents, was up 1.5% from a month earlier but down 20% from a year earlier during the four weeks ending Nov. 27.

“There have been a handful of pieces of relatively good news for the housing market lately, but we’re far from out of the woods,” said Redfin deputy chief economist Taylor Marr. “Key indicators of homebuying demand will likely be teetering on a knife’s edge with every data release that comes out related to the Fed’s path to eventually bringing rates down.”

All that optimism, however, did not translate into higher mortgage rate locks for homebuyers, which are generally an indicator of future home sales. Those rate locks fell 22% in November, compared with October, and were down 48% year-over-year, according to mortgage tech and data firm Black Knight.

“It’s still extremely unaffordable even with rates coming down, even with prices coming down in each of the last four months. We’re still less affordable than we were at the peak of the market in 2006, and you’re seeing that play out in the rate lock numbers,” said Andrew Walden, vice president of enterprise research strategy at Black Knight.

Walden points to inventory still being about 40% shy of where it should be, while the homebuilders continue to pull back and potential sellers stay on the sidelines. Even as prices weaken and rates come down, he said both are still substantially higher than they should be compared with incomes to make housing affordable by historical standards. And none of those are going to move that much any time in the near future.

“As we move throughout 2023 you’re going to see prices continue to soften, you’re going to see incomes hopefully continue to grow and eat up some of that gap, and I think likely we are going to see rates come down from where they are today, but it’s going to take an extended period of time to get there,” said Walden.

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Airbnb launches first hosting platform for apartment tenants

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Airbnb is partnering with several major landlords and management companies to list designated apartment buildings where renters are allowed to offer short-term sublets on the site.

The company said Wednesday that a new page on its website will list so-called Airbnb-friendly buildings, which will give tenants the option to host their apartments just as homeowners can.

Typically, rental buildings prohibit tenants from subletting for short stays.

To start, Airbnb is showcasing 175 apartment buildings in more than 25 major markets, including Los Angeles, San Francisco, Atlanta, Dallas, Houston, Denver, Seattle and Phoenix. Some cities, such as New York City and Washington, D.C., are not available due to local restrictions on short-term rentals.

The platform will help tenants host their rentals, and help the buildings attract tenants who may want to host. How much tenants could earn will vary.

“It depends on the building, depends on the location, there are a lot of different assumptions,” Nathan Blecharczyk, co-founder of Airbnb.

Given how much apartment rents have climbed over the past few years, along with home prices and other rising prices, tenants are increasingly looking for ways to supplement their incomes to make their monthly payments. Rents are starting to ease, but are still up 10% from a year ago, according to Apartment List.

Last year, rents rose more than 15% from the year before.

The new page on Airbnb’s website will also offer a calculator to show how much money the tenant can potentially make per month. The calculation changes depending on the number of bedrooms and the number of nights each building allows, as well as the potential asking rents, given the building’s amenities.

Apartment buildings can also charge the primary tenant a fee of up to 20% of the price of each Airbnb use. For those buildings that have been in test mode so far, Airbnb said tenants have hosted an average of nine nights per month with an average income of $900 per month.

All hosts in the participating buildings must be the primary resident, and the buildings can restrict how many nights per month the apartment can be sublet. That’s generally between 80 and 120 nights per year. The restrictions, which can be enforced since the transactions all take place on the portal, are intended to prevent investors from taking part and subletting the apartments full-time.

The apartment building owner or management company also have the right to review the listings before they go live and deactivate a listing if it does not comply with the building’s standards. They can also mandate a government ID from all potential subletters.

Equity Residential and UDR, which are apartment real estate investment trusts, or REITs, and Greystar, the largest apartment management company in the U.S.,  are among the major names offering apartments with hosting privileges on the new Airbnb platform.

“We believe this platform will provide the right tools for both owners and residents to effectively manage short-term rental activity without impacting overall housing supply,” a Greystar representative said.  “We are collaborating with Airbnb on this innovative approach to participate in the 21st century sharing economy in a thoughtful way.”  

CNBC producer Lisa Rizzolo contributed to this story.

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Business

Mortgage demand rises as interest rates decline slightly

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A home, available for sale, is shown on August 12, 2021 in Houston, Texas.

Brandon Bell | Getty Images

Mortgage applications rose 2.2% last week compared with the previous week, prompted by a slight decline in interest rates, according to the Mortgage Bankers Association’s seasonally adjusted index.

Refinance applications, which are usually most sensitive to weekly rate moves, rose 2% for the week but were still 86% lower than the same week one year ago. Even with interest rates now back from their recent high of 7.16% a month ago, there are precious few who can still benefit from a refinance — just 220,000, according to real estate data firm Black Knight.

Mortgage applications to purchase a home rose 3% for the week, but they were down 41% from a year ago. Some potential buyers may now be venturing back in, hearing that there is less competition and more negotiating power, but there is still a shortage of homes for sale and prices have not come down significantly.

Rates are still twice what they were at the beginning of the year, but they eased somewhat last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.67% from 6.90%, with points increasing to 0.68 from 0.56 (including the origination fee) for loans with a 20% down payment.

“The decrease in mortgage rates should improve the purchasing power of prospective homebuyers, who have been largely sidelined as mortgage rates have more than doubled in the past year,” Joel Kan, an MBA economist, said in a release. “With the decline in rates, the ARM share [adjustable-rate] of applications also decreased to 8.8% of loans last week, down from the range of 10% and 12% during the past two months.”

Mortgage rates haven’t moved at all this week, as the upcoming Thanksgiving holiday tends to weigh on volumes.

“It’s not that things aren’t moving. They just aren’t moving like normal,” said Matthew Graham, chief operating officer at Mortgage News Daily. “Expect things to get back closer to normal next week, but for the market to continue to wait until December 13 and 14 for the biggest moves.”

That’s when the government releases its next major report on inflation and the Federal Reserve announces its next move on interest rates.

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Sharp drop in mortgage rates does little to boost demand

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A home for sale in the Mission Hills area of Los Angeles Tuesday, Oct. 11, 2022 in Mission Hills, CA.

Brian Van Der Brug | Los Angeles Times | Getty Images

Mortgage application volume rose 2.7% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. An additional adjustment was made for the Veteran’s Day holiday.

The small increase followed a government report last week showing that inflation may be starting to ease. That, in turn, sent bond yields plunging and mortgage rates with them. Thursday saw the sharpest one-day drop in the average rate on the 30-year fixed mortgage since daily record-keeping began in 2009.

On a weekly average, the rate on the 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.9% from 7.14%, with points decreasing to 0.56 from 0.77 (including the origination fee) for loans with a 20% down payment.

On a daily basis, the rate on Thursday alone dropped 60 basis points, according to a separate survey from Mortgage News Daily.

Applications to refinance a home loan fell 2% for the week and were 88% lower than the same week one year ago. The rate drop came toward the end of the week, and Friday was a federal holiday, Veteran’s Day, so it is possible refinance demand has yet to react fully to the rate drop.

Mortgage applications to purchase a home, which don’t generally react quickly to interest rate changes, increased 4% for the week and were 46% lower than the same week one year ago.

“Purchase applications increased for all loan types, and the average purchase loan dipped to its smallest amount since January 2021,” said Joel Kan, a Mortgage Bankers Association economist.

Loan sizes may be falling too due falling home prices or potentially more first-time buyers getting into the market again at the entry level.

Mortgage rates did not move much to start this week, but the yield on the U.S. 10-year Treasury dropped Tuesday, first in the morning after a monthly read on U.S. producer prices increased at a slightly slower pace than expected.

They fell further later, hitting a nearly six-week low, after news broke that missiles hit Poland, killing two people. That sparked fears of greater political risk in the already war-torn region. Mortgage rates loosely follow the yield on the 10-year Treasury.

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Weekly mortgage demand flattens, as interest rates climb even higher

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A man enters a Bank of America branch in New York.

Scott Mlyn | CNBC

Mortgage rates rose again last week, throwing even more cold water on demand from both current homeowners and potential homebuyers. Weekly application volume fell 0.1% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 7.14% from 7.06%, with points increasing to 0.77 from 0.73 (including the origination fee) for loans with a 20% down payment.

“Mortgage rates edged higher last week following news that the Federal Reserve will continue raising short-term rates to combat high inflation. The 30-year fixed rate remained above 7 percent for the third consecutive week, with increases for most loan types,” said Joel Kan, MBA’s deputy chief economist.

Refinance demand, which has been positively crushed by the sharp rise in interest rates, fell another 4% for the week and was down 87% compared with the same week one year ago. Mortgage rates started this year around 3%, so there are very few borrowers left who could benefit from a refinance at today’s higher rates. Refinance demand is now at a 22-year low.

Mortgage applications to purchase a home increased 1% for the week. While that wasn’t a major move, it was the first increase in six weeks. Purchase demand, however, is still down 41% from a year ago and close to a seven-year low.

The adjustable-rate mortgage (ARM) share of activity increased to 12% of all applications. ARMs offer lower interest rates, and while they are considered riskier loans, their rates can be fixed for up to 10 years.

Mortgage rates have been moving sideways to start this week, but that could change Thursday, as investors await the October reading from the government’s consumer price index.

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Mortgage demand from homebuyers is nearly half what it was in 2021

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A house’s real estate for sale sign is seen in front of a home in Arlington, Virginia, November 19, 2020.

Saul Loeb | AFP | Getty Images

Mortgage demand fell last week to nearly half what it was a year ago, according to the Mortgage Bankers Association, as rates hit their highest level in 21 years.

Overall, demand for mortgages is at the lowest level since 1997.

Mortgage applications to purchase a home dropped 2% from the prior week and were 42% lower than the same week in 2021. The annual comparison continues to jump each week, as fewer buyers either want or can afford to get into this very pricey housing market.

Applications to refinance a home loan fell just 0.1% for the week, but only because they were so low to begin with – down 86% from a year ago. There are currently fewer than 150,000 qualified borrowers who could benefit from a refinance at today’s rates, according to Black Knight.

Mortgage rates declined slightly to start this week, but are still well over 7% after beginning the year at around 3%. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 7.16% from 6.94%, with points decreasing to 0.88 from 0.95 (including the origination fee) for loans with a 20% down payment.

Federal Housing Administration loans, which come with lower rates and smaller down payment requirements, did experience a slight uptick during the week.

“Despite higher rates and lower overall application activity, there was a slight increase in FHA purchase applications, as FHA rates remained lower than conventional loan rates,” said Joel Kan, an economist at the Mortgage Bankers Association.

The share of homebuyers applying for adjustable-rate mortgages remained high at more than four times what it was at the start of this year. ARMs offer lower rates but are considered a riskier product.

High interest rates are also weighing on home prices. While prices are still higher than they were a year ago, the gains are now slowing at a record pace. Homebuyers are also reconsidering their purchases. Pulte Group reported a 24% cancellation rate in its latest quarterly earnings report Tuesday and said it expected an even higher rate for the next quarter.

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Home prices cooled at a record pace in August, S&P Case-Shiller says

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House for Sale by Owner, Forest Hills, Queens, New York.

Lindsey Nicholson | UCG | Universal Images Group | Getty Images

Home prices are still higher than they were a year ago, but gains are shrinking at the fastest pace on record, according to one key metric, as the housing market struggles under sharply higher interest rates.

Prices in August were 13% higher nationally compared with August 2021, according to the S&P CoreLogic Case-Shiller Home Price Index. That is down from a 15.6% annual gain in the previous month. The 2.6% difference in those monthly comparisons is the largest in the history of the index, which was launched in 1987, meaning price gains are decelerating at a record pace.

The 10-city composite, which tracks the biggest housing markets in the United States, rose 12.1% year over year in August, versus a 14.9% gain in July. The 20-city composite, which includes a broader array of metropolitan areas, was up 13.1%, compared with a 16% increase the prior month.

“The forceful deceleration in U.S. housing prices that we noted a month ago continued in our report for August 2022,” wrote Craig Lazzara, Managing Director at S&P DJI in a release. “Price gains decelerated in every one of our 20 cities. These data show clearly that the growth rate of housing prices peaked in the spring of 2022 and has been declining ever since.”

Leading the price gains in August were Miami, Tampa and Charlotte, with year-over-year increases of 28.6%, 28% and 21.3%, respectively. All 20 cities reported lower price increases in the year ending in August versus the year ending in July.

The West Coast, which includes some of the costliest housing markets, saw the largest monthly declines, with San Francisco (-4.3%), Seattle (-3.9%) and San Diego (-2.8%) falling the most.

A quick jump in mortgage rates from record lows this year has turned the once red-hot housing market on its heels. The average rate on the popular 30-year fixed home loan started this year right around 3%. By June it stretched over 6% and is now just over 7%, according to Mortgage News Daily.

“With monthly mortgage payments 75% higher than last year, many first-time buyers are locked-out of housing markets, unable to find homes with budgets that have lost $100,000 in purchasing power this year,” said George Ratiu, senior economist at Realtor.com.

He also noted that higher home prices combined with higher interest rates are keeping would-be sellers from listing their homes. They appear to be locked in to their lower rates.

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Existing home sales fall to a 10-year low in September

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Real estate broker Rebecca Van Camp places a “Sold” placard on her sign in front of a home in Meridian, Idaho, on Wednesday, Oct. 21, 2020.

Darin Oswald | Tribune News Service | Getty Images

Existing homes are selling at the slowest pace since September 2012, with the exception of a brief drop at the start of the Covid 19 pandemic.

Sales of previously owned homes fell 1.5% in September from August to a seasonally adjusted annual rate of 4.71 million units, according to a monthly survey from the National Association of Realtors.

That marked the eighth straight month of sales declines. Sales were lower by 23.8% year over year.

Sharply higher mortgage rates are causing an abrupt slowdown in the housing market. The average rate on the 30-year fixed home loan is now just over 7%, after starting this year around 3%. That is making an already pricey housing market even less affordable.

Despite the slowdown in sales, inventory continues to drop. There were 1.25 million homes for sales at the end of September, down 0.8% compared with September 2021. At the current sales pace, that represents a 3.2-month supply. Six months is considered a balanced supply.

“Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory,” said Lawrence Yun, chief economist at the NAR. “The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”

Tight supply continues to put pressure on home prices. The median price of an existing home sold in September was $384,800, an increase of 8.4% from September 2021. Prices climbed at all price points. This makes 127 consecutive months of annual increases.

Prices are cooling, however. September marked the third straight month-to-month price decline, which usually fall this time of this year.

They’re falling harder this year, though, particularly on the lower end of the market, where inventory is much leaner. Homes priced between $100,000 and $250,000 dropped 28.4% from a year ago, while sales of homes priced between $750,000 and $1 million declined 9.5%.

Homes did sit on the market slightly longer in September, an average of 19 days, up from 16 days in August and 17 days in September 2021.

Higher mortgage rates aren’t just spooking potential buyers. They’re keeping sellers on the sidelines as well, which adds to the inventory crunch.

“Homeowners love their 3% mortgage rate, and they don’t want to give that up,” Yun said.

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