Mortgage Economic Review December 2022

December 2022 Mortgage Economic Review


December 2022 Mortgage Economic Review

The December 2022 Mortgage Economic Review is a monthly summary of Key Economic Indicators, Data, and Events pertinent to Mortgage, Housing, and Finance Professionals.


AT A GLANCE – Key Economic Events and Data released during November 2022

  • Interest Rates: The 10-Year Treasury yield fell to 3.68% (Nov 30) from 4.10% (Oct 31).
  • Housing: Existing Home Sales fell 5.9%, New Home Sales rose 7.5%, and Pending Home Sales fell 4.6%. Home Prices fell for the 3rd month in a row.
  • Labor: The US Economy created 284,000 New Jobs in October and 263,000 in November, the Unemployment Rate rose to 3.7% in October and November, Wages increased 5.1% YoY.
  • Inflation: October CPI rose 0.4% (+7.7% YoY), and PPI rose 0.2% (+8.5% YoY).
  • The Economy: US GDP grew by a 2.9% annualized rate in 3Q2022, up 1.9% YoY.
  • Consumers: Retail Sales rose 1.3%, Consumer Sentiment & Confidence declined.
  • Stock Markets rose in November: Dow +5.7%, S&P +5.4%, Nasdaq +4.4%.
  • Oil prices fell to $81/Barrel (Nov 30) from $87/Barrel (Oct 31). Natural Gas prices rose to $6.93/MMBtu (Nov 30) from $5.93/MMBtu (Oct 31).
  • Conforming Loan Limit Increased to $726,200 for a 1-unit property.


Interest Rates and Fed Watch 

As expected, the Fed raised the target Fed Funds Rate by 0.75% after the FOMC Meeting on November 2nd. The next FOMC Meeting will be December 13th and 14th. Fed Watchers are expecting another Interest Rate increase after that meeting. The big question is whether it will be 0.50% or 0.75%. On November 30th, Chairman Powell stated, “The time for moderating the pace of rate increases may come as soon as the December meeting.” The Fed will continue to raise rates, but they may reduce the size of those increases. Before they make that decision, the Fed will get another look at CPI Data on December 13th. That CPI data will influence if the Fed raises rates by 0.50% or 0.75%. If the CPI shows Inflation is quickly cooling – expect a 0.50% increase. If the CPI is still running hot – expect a 0.75% increase.

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  • 10-Year Treasury Note Yield fell to 3.68% (Nov 30 ) from 4.10% (Oct 31).
  • 30-Year Treasury Bond Yield fell to 3.80% (Nov 30 ) from 4.22% (Oct 31).
  • 30-Year Fixed Mortgage fell to 6.58% (Nov 23) from 7.08% (Oct 27).
  • 15-Year Fixed Mortgage fell to 5.90% (Nov 23) from 6.36% (Oct 27).


Housing Market Data Released in November 2022

Existing Home Sales – which accounts for 90% of all Home Sales – was down 28% in the last 12 months. This is a huge number, but no one is surprised. The combination of high prices, low inventory, and 7.0% mortgage rates is a triple whammy for the Housing Market. Affordability is the  major reason keeping buyers away. Many Consumers have a sense that Home Price have gotten ahead of value, so they are waiting for prices to come down. Even buyers that can afford higher payments (including cash buyers) are waiting for prices to adjust. Housing analysts also have differing views on the direction of Home Prices. 2023 Home Price forecasts vary between up 5.0% to down 20.0%. Regardless of who is correct, many Buyers are in “wait and see” mode.

  • Existing Home Sales (closed deals in October) fell 5.9% to an annual rate of 4,430,000 homes, down 28.4% in the last 12 months. The median price for all types of homes is $379,100 – up 6.6% from a year ago. The median Single-Family Home price is $384,900, up 6.2% YoY. The Median Condo price is $331,000, up 10.1% YoY. Homes were on the market for an average of 21 days, and 64% were on the market for less than a month. Currently, 1,220,000 homes are for sale. 26% were all Cash Sales.
  • New Home Sales (signed contracts in October) rose 7.5% to a seasonally adjusted annual rate of 632,000 homes – down 5.8% YoY. The median New Home price rose 8.2% (+15.4% YoY) to $493,000. The average price rose 5.3% (11.5% YoY) to $544,000. There are 470,000 New Homes for sale, an 8.9 month supply.
  • Pending Home Sales Index (signed contracts in October) fell 4.6% to 77.1 from 79.5 the previous month, down 36.7% YoY.
  • Building Permits (issued in October) fell 2.4% to a seasonally adjusted annual rate of 1,526,000 units – down 10.1% YoY. Single-Family Permits fell 3.6% to an annual pace of 839,000 homes, down 22.1% YoY.
  • Housing Starts (excavation began in October) fell 4.2% to an annual adjusted rate of 1,425,000, down 8.8% YoY. Single-Family Starts fell 6.1% to 855,000 units, down 20.8% YoY.
  • Housing Completions (completed in October) fell 6.4% to an annual adjusted rate of 1,339,000 units – up 6.6% YoY. Single-Family Completions fell 8.3% to an annual adjusted rate of 1,048,000 homes – up 2.7% YoY.
  • S&P/Case-Shiller 20 City Home Price Index fell 1.5% in September, up 10.4% YoY.
  • FHFA Home Price Index rose 0.1% in September, now up 12.4% YoY.


Labor Market Economic Data Released in November 2022

The Economy created 284,000 New Jobs during October and 263,000 in November. The Unemployment Rate rose to 3.7% in October and was unchanged in November. Wage growth accelerated to 5.1% YoY as workers demanded higher wages to keep up with Inflation. Job Openings fell slightly but are still above 10,300,000. The Labor Market remains robust despite recent mass layoffs in the tech sector. Those laid-off tech workers should have no trouble finding work, but they may get paid less than their old job. Keep in mind this is the Holiday season. Labor Data typically gets distorted during this period due to the need for seasonal workers.

  • The Economy created 284,000 New Jobs during October and 263,000 in November.
  • The Unemployment Rate rose to 3.7% in October and was unchanged in November.
  • The Labor Force Participation Rate fell to 62.2% in October and to 62.1% in November.
  • The Average Hourly Wage rose 0.4% in October, and 0.6% in November, up 5.1% YoY.
  • Job Openings fell to 10,334,000 in October from 10,700,000 in September.


Inflation Economic Data Released in November 2022

The Inflation Data is trending down. On an annual basis, Inflation is running at about 7.0%. The 1-month and 3-month Inflation data show it at about 5.0%. It looks like the Interest Rate hikes are doing the job. It is difficult – if not impossible – to tame Inflation without weakening the Labor Market. Higher wages mean higher prices. Current Labor Data shows wages increased by about 5.0% annually. To control Inflation, you have to control wages. Many Economists believe the Unemployment Rate has to rise above 4.0% before wage pressure can subside. If you are trying to predict the future path of Inflation, do what the Fed does – watch the Labor Data, specifically the Unemployment Rate and Wage data.

  • CPI rose 0.4%, up 7.7% YoY              |             Core CPI rose 0.3%, up 6.3% YoY
  • PPI rose 0.2%, up 8.0% YoY             |             Core PPI rose 0.2%, up 5.4% YoY
  • PCE rose 0.3%, up 6.2% YoY            |             Core PCE rose 0.5%, up 5.1% YoY


GDP Economic Data Released in November 2022

The 2nd estimate for 3rd Quarter GDP showed the US Economy grew at a 2.9% annualized rate, up 1.9% YoY. The Economy keeps chugging along. The strength of the US Economy continues to defy many Economists’ expectations. Although the majority of Economists are predicting a Recession in 2023, the data has yet to show that to be true. The US Economy has displayed remarkable resilience after the Covid lockdowns, supply chain disruptions, Energy price shocks, and the Ukrainian War.


Consumer Economic Data Released in November 2022

Black Friday – Cyber Monday (BFCM) kicked off the Holiday Shopping Season with impressive numbers. Early estimates are showing Thanksgiving Weekend Sales exceeded $11.0 Billion, despite Inflation, high gas prices, high-Interest Rates, high Consumer Debt, and low Consumer Confidence. This is great news for an Economy that is 70% Consumer driven. Much of the recent Consumer Spending purchases have been made with debt, which is starting to worry some Economists. Other Economists dismiss the debt issues. The Consumers’ Balance Sheet is still healthy. Home Equity is at an all-time high and is offsetting the revolving debt.

  • Retail Sales rose 1.3% during October, up 8.3% in the last 12 months.
  • Consumer Confidence Index fell 2.0% (-10.5 YoY) to 100.2 from 102.5 the prior month.
  • Consumer Sentiment Index (U of M) fell to 56.8 from 59.9 the previous month.


Energy, International, and Things You May Have Missed  

  • West Texas Intermediate Crude fell to $81/Barrel (Nov 30) from $87/Barrel (Oct 31).
  • North Sea Brent Crude fell to $85/Barrel (Nov 30) from $93/Barrel (Oct 31).
  • Natural Gas rose to $6.93/MMBtu (Nov 30) from $5.93/MMBtu (Oct 31).
  • Population Milestone: The United Nations projected the world population reached 8,000,000,000 human inhabitants on November 15, 2022.
  • Donald Trump announced he will make his third run for US President in 2023.
  • Crypto Trading firm FTX Exchange filed for bankruptcy. Its founder and CEO lost $16 Billion in a few days.
  • Several large tech firms announced major layoffs: Amazon – 10,000, Facebook – 11,000, Twitter – 3,700 (half its staff).
  • Large protests against China’s Zero Covid lockdowns swept across several Chinese cities.


The Mortgage Economic Review is a concise summary of Key Economic Data that influences the Mortgage and Housing Markets. It’s a quick read that keeps busy Professionals updated on important Economic Information. Feel free to share this with colleagues in the Mortgage, Housing, Finance, and Banking business. To have the Mortgage Economic Review emailed to you each month, click here.


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Mark Paoletti,

The Mortgage Economic Review is for informational and educational purposes only and should not be construed as investment, legal, financial, or mortgage advice. The information is gathered from sources believed to be credible and maybe opinion-based and editorial in nature. Mortgage Elements Inc does not guarantee or warrant its accuracy or completeness, and there is no guarantee it is without errors. This newsletter is for use by Mortgage, Housing, and Finance Professionals and is not an advertisement to extend credit or solicit mortgage originations. © Copyright 2022 Mark Paoletti, Mortgage Elements Inc, All Rights Reserved.