This Week In A Nutshell: Rates are climbing to kick off the week after turmoil in the Japanese bond market and President Trump’s intensified rhetoric on Greenland. The focus this week will be on the president’s expected housing affordability announcements during his speech Wednesday at the World Economic Forum in Davos.
Upcoming Attractions
The week will be light on market-moving economic data, but there is considerable geopolitical and policy action to keep us busy.
The president is expected to give a speech early Wednesday morning that centers on housing affordability initiatives. A number of demand and supply-side proposals are potentially on the list, including portable/assumable mortgages, lifting capital gains taxes on real estate sales, using 401(k)s for down payments, and expanding tax credits and incentives for building new construction. While administration officials have previewed some, it’s not clear what will be announced until after the speech. And even then, it’s just the start of the conversation; many proposals face significant logistical and statutory hurdles.
Last Week’s Highlights
CPI report: The data was still a little noisy, but likely pretty mild. That should keep the Fed’s attention firmly on the jobs reports and on hold on rates until the summer.
NAR existing home sales: Sales jumped to 4.35 million in December, against our forecast of 4.15 million. We’ll need to see another month of data to see if NAR is measuring a durable increase in activity or if this is a spike that reverses (similar to the February spike that has shown up the last three years).
New home sales: We also saw a jump in new home sales for September and October (data delayed by the shutdown) to 738,000 and 737,000, respectively. New home sales data are volatile and often revise significantly because they are based on contract signings.
Redfin Housing Market Reports
Pending Home Sales Drop to Lowest Level on Record Aside From Start of Pandemic: Pending sales fell 6% in December—the largest seasonally adjusted decline since 2022—amid stubbornly high housing costs and economic uncertainty. The typical home that did sell spent 60 days on the market, the slowest December pace in a decade. The supply of homes for sale fell the most since 2023 as sellers retreated amid sluggish demand. The good news for buyers is mortgage rates have been falling and many sellers are offering concessions—the typical home that sold last month went for roughly 2% less than its list price.
Chen ZhaoChen Zhao is the head of economics research, where she produces research on the housing market for public and internal audiences.
Previously, she was an executive director leading housing finance and financial markets research at the JPMorgan Chase Institute. Prior to joining JPMCI, Chen was an economics consultant at Analysis Group, Inc., where she worked on financial litigation cases and led teams conducting health economics and outcomes research on behalf of pharmaceutical companies.
While in graduate school, Chen was with the Center for Economic Studies and the Social Economic and Housing Statistics Division at the US Census Bureau, where she conducted applied microeconomics research using large scale restricted-access linked survey-administrative data. She started her career at the White House Council of Economic Advisers, where she focused on labor and health economics.
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