🧩 The Inventory Puzzle

What will 2023 bring for housing inventory? Read on to find out...

In today's issue:

  • What will 2023 bring when it comes to housing inventory?

  • Rocket Mortgage is rolling out its first special purpose credit program.

  • HousingWire debuts their weekly housing market tracker.

  • Logan Mohtashami comments on the unemployment situation, and what it will take to trigger the mythical "Fed pivot."

🔖In case you missed it: The NYT has published its low-down payment guide for 2023.

The Inventory Puzzle 🧩

butterknife here, with a roundup of news you might have missed. Since there are no major releases or data until tomorrow's jobs report, we want to take a moment to talk about housing inventory.

Inventory, to put it lightly, is low right now. I've seen and heard some debate on this point; specifically, whether the state of inventory can be attributed to normal seasonal patterns in the housing market.

After all, most analysts expected this year's wild spike in mortgage interest rates to rapidly increase the amount of available inventory on the market, chronic underbuilding aside. But it turns out we might be in the exact opposite situation — a puzzle indeed.

(it turns out there's a Simpsons GIF for every situation.)

In this week's housing market tracker, courtesy of HousingWire's Logan Mohtashami (more on that later,) he takes a stab at the data and finds something very interesting...

On a weekly basis, leading indicators show total housing inventory running dangerously close to dropping under 1 million active listings, a floor that has only been broken once before in recent history.

Check out the entire article to learn more about what this all means and why it might be happening.

❓Did you know: In April 2020, as a result of the COVID-19 pandemic, the US unemployment rate briefly spiked to 14.7%, a level not seen since the Great Depression.

In 2023, the Spotlight is on the Underserved

You may remember an announcement made by the FHFA back in June of this year, expressing their intent to focus on equitable housing from 2022 to 2024.

As part of that program, they developed new special purpose credit programs to help "address barriers to sustainable homeownership".

In a nutshell, they planned to allow lenders to extend some assistance to some protected classes without running afoul of ECOA (the Equal Credit Opportunity Act.) Bank of America was one of the first lenders to respond, and others planned to follow.

Now, Rocket Mortgage has responded with their own program targeting underserved communities, Purchase Plus.

The program offers up to $7,500 in credits (a combination of a $5,000 base credit and percentage of the home's price) for first-time homebuyers to cover closing costs, and is currently limited to six major cities.

United Wholesale Mortgage, Rocket's main rival in the wholesale lending space, has yet to follow suit — but I would be surprised if we didn't see a similar program on their end in the next few weeks or months.

🤡 Fun Fact:  HousingWire has debuted a new weekly column -- the housing market tracker. The focus is on leading data points, as opposed to the lagging indicators more commonly watched by market participants. We'll be sharing the highlights here, as usual, but if you want to keep up on your own, check it out here.

👨‍💻Jobless Claims -- Stay Tuned

Tomorrow brings the release of unemployment data — so what are we looking for?

Of course, no one really wants unemployment, but it remains a critical data point in a puzzling economic environment, and it's an important driver of the Fed's actions going forward.

Market bulls are betting on a so-called "Fed pivot" this year, a drastic change in course from hiking to cutting interest rates. For the Fed to truly pivot, something would need to break, so to speak — unemployment could be one of those thing.

Specifically, housing analyst Logan Mohtashami has a magic number in mind:

For reference, we're currently sitting at a comfy 221,000 jobless claims on the 4-week moving average, but keep an eye out for our newsletter tomorrow to find out which direction those numbers are headed.

👀All Eyes on Rates

Markets were closed yesterday for the holidays — but stay tuned to find out where the rate market went in tomorrow's issue of butterknife.

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