Mortgage Rates and Home Prices

If inflation fears ease and interest rates start to decline, buyers may hold out for still lower rates, which would result in sellers needing to cut their prices to close deals. According to Realtor.com, a real-estate listings website, mortgage rates are expected to drop to 6.5% by the end of next year, compared to the recent rate of 7.22%. As a result, the median home price is projected to slump 1.7% in 2024, marking the first full-year drop since 2011.

In 2022, higher rates prevented double-digit home price gains as buyers and sellers took a step back. However, if the Federal Reserve adjusts its monetary policy and rates continue to ease, buyers may choose to wait and see how the market unfolds. "The longer you wait, the better your mortgage rate is going to be, especially if prices also soften," says Realtor.com's chief economist Danielle Hale.

It's important to note that this slump won't be uniform across all markets. Among the 100 large metro areas in Realtor.com's forecast, 63 are likely to see prices rise in 2024. Markets with inventory constraints will curtail sales and keep prices high. This is particularly true for Austin, St. Louis, and Spokane, Wash., which experienced price increases during the pandemic and are now reverting to more normal levels.

Deals

Offshore creditors supported a last-ditch restructuring of China Evergrande debt to avoid liquidation. The deadline: Monday...The Wall Street Journal reported that Elliott Management had taken a more than $2 billion stake in wireless tower company Crown Castle, that Cigna and Humana were holding merger talks, and that Neiman Marcus rejected Saks Fifth Avenue’s $3 billion offer...China fast-fashion company Shein filed for a U.S. IPO...Miriam Adelson sold $2 billion in Las Vegas Sands stock to buy a majority stake in the NBA’s Dallas Mavericks from Mark Cuban.

Milestones

Charlie Munger, Warren Buffett’s longtime partner at Berkshire Hathaway, died at 99 in a California hospital. Former Secretary of State Henry Kissinger, died at 100, as did the first woman on the U.S. Supreme Court, Sandra Day O’Connor, at 93.

The Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey

Economists forecast 9.35 million job openings on the last business day of October, roughly 200,000 fewer than in September. There are currently 1.5 open positions for every unemployed worker, down from a peak of two in March of 2022, but still historically elevated.

The Institute for Supply Management releases its Services Purchasing Managers’ Index for November

Expectations are for a 51.8 reading, which would equal October’s number.

Thursday 12/07

Broadcom reports fourth-quarter fiscal 2023 results. The semiconductor company recently closed its $60 billion-plus acquisition of cloud-computing firm VMware. Analysts expect Broadcom to earn $10.96 a share for the quarter on sales of $9.3 billion.

Friday 12/08

The BLS releases the jobs report for November. Consensus estimate is for an increase of 175,000 in nonfarm payrolls, 25,000 more than in October. The unemployment rate is expected to remain unchanged at 3.9%. Jobs growth has slowed this year to a still-solid average of 238,800 a month after two years of average monthly gains of slightly more than 500,000.