Happy New Year!

This week was shortened due to the New Years holiday, but we still have some important economic news. We received the Pending Home Sales report, as well as two important home price reports that give insight into the health of the Real Estate market. The Federal Reserve (Fed) released the minutes from the most recent meeting in December. Rates ended the week slightly off 12-month lows, but still about .9% lower in rate than one year ago.   

Pending Home Sales Jump Higher 

Pending Home Sales, measuring signed contracts on existing homes, rose by 3.3% in November. There was also a revision to the October numbers from 1.9% to 2.4%. These are very strong numbers and were the highest in almost three years. This is very positive for real estate across the country and is likely a result of the lower rates we have seen this year. 

CEO Survey Signals Hiring Pullback 

Yale School of Management released an annual CEO survey to see how they felt about the labor market. Two out of three parties said they would either be firing workers or keeping the existing size of their labor force. This doesn’t bode well for improvement in 2026 labor market conditions. 

Case-Shiller Prices Beat Expectations 

Looking at home price appreciation, we got the “gold standard” Case-Shiller report for October that showed 0.4% rise in the month, much stronger than estimates. This is a seasonally adjusted number. Yearly, they are showing homes increasing in value by 1.4%.  

FHFA Index Shows Steady Growth 

The Federal Housing Finance Agency (FHFA), the regulator of Fannie Mae and Freddie Mac also released their House Price Index.  While Case-Shiller reflects all homes on the market, FHFA only captures conforming loan amounts that are guaranteed by Fannie and Freddie. FHFA also showed a 0.4% rise in October, stronger than the 0.1% expected. Annually, FHFA is showing a 1.7% rise in values. The pundits that are discussing a housing value crash are looking pretty foolish.   

Fed Minutes Support Future Cuts 

Minutes from their December 10^th meeting, the Fed showed that most members wanted to cut rates further if inflation eased gradually as expected. They expect inflation numbers to remain somewhat elevated before coming down to the 2% target. Remember, this meeting occurred prior to the October/November CPI data that showed Core Inflation dropping from 3% to 2.6%. The Fed members acknowledged the weakening jobs market.   

The meeting was also before the BLS Jobs Report came out, showing a large increase in the unemployment rate from 4.4% to 4.6%.  Some members acknowledged that virtually all gains in employment are in sectors that are not sensitive to the movement of the economy, like healthcare and education jobs. 

Looking Ahead: Next Week Brings Major Jobs Data 

Next week brings another jobs week with the big BLS Jobs Report on Friday: 

Wednesday, January 7: ADP Employment Report, Job Openings and Labor Turnovers (JOLTS) 

Thursday, January 8: Jobless Claims 

Friday, January 9: Housing Starts, BLS Jobs Report