2/24 Better Late Than Never
US Stock Market Booms, Mortgage Rates Jump Above 7% Again, Phoenix's Market Declines
This newsletter is 693 words and should take about 7 minutes to read.
Read 2 week’s ago newsletter here → "2/10 Wasted Management"
Nivida singly handed save the US stock market (most likely the world too). Florida may ban social media for teens. Japan is no longer the world’s third largest economy. The inventory of Pop Tarts passed away. The brand that held the world’s oldest logo branding is changing after 140 years (Lyle’s Golden Syrup). At&T decided go MIA Thursday. And West Virginia is holding a vigil for a Hooters that is being demolished.
tl;dr
Both supply and demand are increasing. With supply outpacing demand leading to the market to slow down.
The average mortgage rate is 7.08%
After 110 consecutive weeks of this newsletter every week, I decided to take a bye week last Saturday. Sorry for going rogue but I’m back.
Phoenix
The good news is that the annual sales rate has stopped falling. The bad news is that it has not started rising.
We appear to be stuck at the very low rate of between 72.1k and 72.6k closed listings per year across all areas & types. Just 2 years ago we were at 110k, so we are missing some 38k deals compared with then. The percentage of list price that sellers achieve with the contract price is up from 96.61% a year ago to 97.58% today. This reflects a more positive mood than we were seeing a year ago. At 117.5 the Cromford Index is slightly lower than it was last year (120.8) and it is not showing much momentum in either direction, while last year it was moving steadily higher.
Messages from the data are giving us mixed signals. The signals are weak too. Demand is improving but so is supply. Normally this would lead to greater volume but any growth in sales is so slow that it is almost imperceptible, when seasonality is taken into account.
Last year we saw 60.6% growth in listings under contract on February 11 compared with the start of the year. This year the growth is 59.9%, very slightly worse and starting at a lower base point.
Altogether there is not much to get excited about if you are longing for positive movement. On the other hand, there is also not much to get excited about if you are hoping for the market to crash. I have nothing to satisfy either of these positions.
Arizona is famous for its boom and bust real estate cycles, but at this moment it is very much stuck in neutral
At the start of the year we were hoping that sales volume would have turned around by now and be starting to climb as the Spring season got underway. This is unfortunately not happening yet. The latest reading for the annual closing rate is 72,223 across all areas & types. This is down from 72,359 a week ago and 72,448 the week before that. Not encouraging.
There are a few segments that are seeing some growth, but even in the City of Phoenix, we have dropped below 10,000 single-family closings per year for the first time since 2008.
The Cromford Market Index is a gauge of Phoenix’s Supply and demand metrics. 100 is considered a balanced market. Anything higher than the 100-point benchmark is considered a seller’s market. Anything below 100 is considered a buyer’s market.
As of February 23rd, 2024, the CMI has decrease to 117.2. Down 3 basis points from 7 days ago.
Supply has increased by 9 basis points and demand has increased by 8 basis points.
This is the first week in months the CMI has decreased. Signaling a turn in the market.
Rates
7-Day rate change: +7 basis points
YoY change: +37 basis points
Average interest rate: 7.08%
S&p500 vibe check
US stocks rallied to new highs yesterday as Nvidia's strong earnings helped lift the tech sector and broader market
The Nasdaq had its best day in a year, almost fully recovering from its November 2021 fall
Meme, tweet, & fact of the week
Maine is the U.S. state closest to Africa.