Has the recent inflation data given the Federal Reserve a pathway for a 2024 pivot? The Fed has whispered about what can happen if the inflation growth rate falls more into 2024 and it’s a positive take. Some have thought the Fed would need to keep the fed funds rate elevated for years until they see 2% core PCE data. However, I believe there could be another path for 2024. 

First, let’s look at today’s CPI inflation data. It came in a bit lighter than expected — no real surprise here.

From BLS: The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in July on a seasonally adjusted basis, the same increase as in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index increased 3.2 percent before seasonal adjustment.

However, once you strip out rent — which is what the Fed has told us they want to focus on because of the lag in rent data — the growth rate of inflation is falling more noticeably. The Fed is focused on core service inflation less shelter. If you take CPI data in total and subtract the shelter data, inflation data has collapsed.

90% of the inflation growth came from the shelter data, which we know needs to catch up to the reality that the data line below is much lower in real terms.

How can this lead to a 2024 pivot if we don’t have a job-loss recession? This is a good question, as I am not a Fed pivot person until the labor market breaks. For me that means jobless claims data gets above 323,000 on the four-week moving average. Today we did see a spike in claims data. However, the four-week moving average is still 231,000, far from my Fed pivot level.


So why would we see a Fed pivot if labor is still good? In a recent interview with the New York Times, the Fed mentioned something that can set the groundwork for the Fed to cut rates without a job-loss recession. They talked about real yields being restrictive. A simple way to think about this is that with inflation falling and rates up as much as they are now, the Fed believes their Fed Funds rate is at restrictive levels currently.

At first, that could make it sound like they don’t want to hike again. However, if the growth rate of inflation falls even more, then the Fed can change its tune in 2024, even cutting rates next year to make policy less restrictive.  

Of course, economic data matters here; if the economy picks up steam and inflation picks up again, this variable changes. However, if the labor market weakens, they have given the marketplace a signal that fed rate cuts will happen. Even if the labor market stays firm, cuts could happen next year if inflation’s growth rate falls. This doesn’t mean we will see massive rate cuts soon, but it does lay the foundation for a less hawkish Fed going into 2024.

So far the bond market has had a mild response to today’s data. Even with the weaker jobless claims data, we haven’t seen any significant moves this morning. As of this second, the 10-year yield is at 4%.

My 2023 forecast range for the 10-year yield was 3.21%-4.25%, meaning mortgage rates between 5.75%-7.25% for 2023, and that the labor market would be the big driver on bond yields, not inflation. As we can see in the chart above, the growth rate of inflation has fallen, but bond yields are near the highs, not the lows. The economy has stayed firm, and labor hasn’t broken. So far in 2023, my premise of bond yields and labor has held as the economy has stayed firm.

The inflation report was slightly better than expected: we see how much rent inflation now holds up the core side of the CPI data. However, I believe the more critical storyline here isn’t the inflation report today, it’s what it can mean next year if this trend continues. I discuss this topic with HousingWire Editor in Chief Sarah Wheeler on today’s HousingWire Daily podcast.

One of my economic themes over the past year is that you don’t need a job-loss recession to have the growth rate of inflation fall — this isn’t the 1970s. We had a global pandemic, and historically global pandemics are very inflationary early on and then things get better over time. I hope the Fed sticks to this theme for next year and that we don’t need jobless claims to get worse for the Fed to pivot.

Roughly 80% of real estate investors surveyed are selling single-family homes at or above asking price after fully renovating the properties to make them habitable, according to a report from real estate marketplace New Western.

“Investor sentiment is positive right now as they haven’t let the macroeconomic environment slow them down,” said Kurt Carlton, co-founder and president of New Western, one of largest real estate investment marketplaces in the U.S. “The U.S. is lacking about 320,000 listings valued at the affordable range for middle-income buyers. These investors see the housing shortage as an opportunity to deliver homes for buyers where the payoff is larger than the profits.”

From Q1 2023 to Q2 2023, the top five cities for New Western investors were Boston, MA (88% growth), Washington, D.C. (50%), Charlotte, NC (49%), Jacksonville, FL (48%) and Houston, TX (46%). Other notable markets that grew in the same period included popular Sunbelt investor havens Atlanta and Dallas.

New Western investor activity grew across these markets even though a recent Redfin report showed a 40% decrease in investor purchases. This illustrates how investors are determined to find opportunities despite negative market sentiment, New Western concluded. Approximately 55% of survey respondents said location/neighborhood is most important to their buyers. On average, homes purchased through New Western and later renovated sell for 31% less than new traditional homes for sale in the same market.

Independent rehabbers, according to the report, are stepping in to address “scalability” challenges and fill the gaps in individual markets, driven by demand. 

“Clearly, the survey shows that the housing dynamics have changed in the mind of some investors,” said Logan Mohtashami, Lead Analyst at HousingWire. “New listing data is trending at all-time lows; active inventory growth has been so slow in 2023 that we will see some negative year-over-year prints soon in the weekly inventory data. Also, housing demand stabilized from its waterfall collapse in 2022. In this environment, the opportunity to fill in the need due to the housing shortage is being tackled by investors. Also, this is all happening with higher rates; if rates fall in this environment, demand has nowhere to go but up from such low levels.”

For the remainder of 2023, investors are confident in the residential real estate market; about 70% of respondents plan to invest in one to three properties and 75% saw business growth from the second half of 2022 to date.

A little over 70% of respondents invest in the Southwest and Southeast regions of the U.S. Additionally, roughly 45% of respondents fund their investments through hard money or investment financing and about 30% through cash.

Summer is here, and housing inventory is finally growing! The spring housing inventory was like a zombie rising from the grave, very slow, but the summer is showing some promise and let’s hope it continues. Purchase apps had a small week-to-week gain. Mortgage rates were again in a small range, hanging near 7%.

Here’s a quick rundown of the last week:

• Active inventory grew 8,886 weekly. I am still hoping for some weeks that show inventory growth between 11,000-16,000
• Mortgage rates stayed in a tight range between 6.875%-6.95%
• Purchase application data showed a 2% growth week to week

Weekly housing inventory

The active listings data saw decent growth last week, less than I would like to see, but growth nonetheless. I would feel much better about the inventory situation if we added an additional 3,000-8,000 houses to the weekly data line from current levels. However, the real positive story here is that even with new listing data trending at an all-time low, we are getting the growth in active listings we traditionally see in the spring and summer.

• Weekly inventory change (June 16-23): Inventory rose from 451,047 to 459,907
• Same week last year (June 17-24): Inventory rose from 415,582 to 441,106
• The inventory bottom for 2022 was 240,194
• The peak for 2023 so far is 472,680
• For context, active listings for this week in 2015 were 1,179,728

As you can see in the chart below, the inventory growth has been slow this year, and we will have negative year-over-year weekly active inventory data very soon. But, last year saw the biggest home sales crash ever recorded in history, so the rise in inventory last year happened because of an abnormal event and we were working from a very low bar. So, it shouldn’t be a shock that as soon as housing demand just stabilized, we ran into some negative year-over-year data.

In addition, new listing data turned negative year over year after the second half of 2022. The affordability hit with higher mortgage rates has impacted new listings data since most sellers are buyers, thus facilitating an all-time low in new listings data. Also, we must remember that even in 2021, when we had 3% mortgage rates, new listing data was trending at all-time lows. 

New listings data has had three weeks in a row of negative weekly data, nothing big, of course, but we are starting to get into the seasonal decline period of this data line. This is something to focus on over the next four to six weeks. The data shows a noticeable decline year over year, and 2021/2022 were already working from all-time lows.

Compare the new listings data this week to that in recent years:

• 2023: 63,106
• 2022: 84,014
• 2021: 76,761

Last week, NAR released the existing home sales report, which showed a slight monthly growth in sales. More importantly, it showed that the days on market dropped back to the teenager level, which means we are once again in a savagely unhealthy housing market. Nothing good is happening in housing when days on market are so low. Also, NAR updated its inventory report showing a year-over-year decline in inventory.

NAR total Inventory levels:

• Historically inventory is between 2-2.5 million
• The peak in 2007 was a bit over 4 million
• Currently we’re at 1.08 million
• Last year at this time it was 1.15 million

People often ask me why there is such a difference between the NAR data versus the Altos Research inventory data. This link explains the difference and is worth a read.

The 10-year yield and mortgage rates

The bond and mortgage rate world has been calm the last two weeks. Considering all the data and Federal Reserve talk we have had recently, it’s surprising how stable rates have been. The 10-year yield had a small range last week, and mortgage rates stayed in a range between 6.875%-6.95%.



In my 2023 forecast, I wrote that if the economy stays firm, the 10-year yield range should be between 3.21% and 4.25%, equating to mortgage rates between 5.75% and 7.25%. As long as jobless claims trend below 323,000 on the four-week moving average, the labor market stays firm, which means the economy remains healthy. Jobless claims have stayed below this range all year so far and job openings are still at 10 million. 

I have also stressed that the 10-year level between 3.37% and 3.42% would be hard to break lower. I call it the Gandalf line in the sand: “You shall not pass.”  As you can see in the chart below, we have tested this line many times, and yet the 10-year yield could not pass. The setup for the 10-year yield to stay in the range is intact. Unless the U.S. dollar explodes higher or we get some market stress overseas, we should remain in the forecast range. 

The counter to my 10-year yield range would be if the economy here or around the world starts to accelerate higher; that would be a valid premise to get the 10-year yield above 4.25%.  


The issue in 2023 is more than the 10-year yield; since the banking crisis started, the spreads between the 10-year yields and 30-year mortgage rates have gotten worse, and until the Fed cries uncle, it doesn’t look like we will see any more improvement.

Another aspect of my 2023 forecast is that if jobless claims break over 323,000 on the four-week moving average, the 10-year yield could break under 3.21% and head toward 2.73%. Last week we didn’t have much movement here with jobless claims, but we have seen the labor market get looser since the lows in 2022.

From the St. Louis Fed: Initial claims for unemployment insurance benefits were little changed in the week ended June 17, at 264,000. The four-week moving average increased to 255,750

Purchase application data

Purchase application data has surprised people with back-to-back positive prints in the last two weeks of 8% and 2%, which means year to date, we have had 12 positive prints versus 11 negative prints. There is no clear direction on demand on the week-to-week data. However, the fact that this is happening is a huge deal, as you can see in the chart below. If this hadn’t happened, all of us would be having a different conversation today about the housing market and inventory.


Since Nov. 9, 2022, we have had 19 positive and 11 negative prints, which shows that demand has stabilized. Now that we are almost to July 4, you can clearly see it in the existing home sales data, as purchase apps are a forward-looking indicator.



Home sales can still trend below 4 million this year if we see more weakness in purchase application data, but the sales decline is much slower this year. This is significant because the market is acting normally again with these low sales levels. This gives everyone a better perspective of where demand is going, as last year’s waterfall collapse was a historic event.

The week ahead: Housing data and PCE inflation

We will have a big week ahead in data. The S&P CoreLogic Case Shiller home price index and the FHFA home price index will come out this week and they will show the firming up the month-to-month price data compared to what we had in the second half of 2022. Also, the new home sales report is coming up, and we will see how much progress we have made. 

Pending home sales will be out next week. I don’t expect much to happen there; in fact, we could have a negative report as we did have four straight weeks of negative purchase application data recently. 

Also, the PCE inflation data will be released Friday — this is where the Fed wants the inflation growth rate to go back down to 2%. I know people love to focus on CPI inflation data, but the PCE data matters more. Below is a look a Core PCE data, which the Fed wants to see go much lower.


So, we have a busy week of data, and of course, we always keep an eye out on jobless claims data every Thursday. However, four housing reports and inflation data with some Fed talk make for an exciting week for bond yields and mortgage rates. Also, we never know what we will get from Russia, with love or without. 

Here’s a quick rundown of the last week:

• Active inventory grew 6,722 weekly. I had anticipated much more this week after the holiday week slowed down, so a bit disappointing. 
• Mortgage rates stayed in a small range between 6.89% – 6.94% 
• Purchase application data had its fourth straight week of negative data as rates near 7% slowed down demand.

Weekly housing inventory

We have two big housing inventory themes in 2023 that must be discussed. First, it took the longest time in U.S. history to find the seasonal bottom this year — all the way to April 14, which is highly abnormal. I did a podcast on why I believe this is happening post-2020 when it wasn’t normal in the past. 

Second, inventory growth hasn’t been the significant story year to date. Still, at least we have had some of the traditional seasonal inventory growth in 2023, giving us more inventory than last year. While this week was disappointing because I was expecting active listings to grow by around 11,000-12,000, I will take the 6,722 number.

• Weekly inventory change (June 2- June 9): Inventory rose from  436,284 to 443,006
• Same week last year (June 3 June 10): Inventory rose from 368,436 to 392,792
• The inventory bottom for 2022 was 240,194
• The peak for 2023 so far is 472,680
• For context, active listings for this week in 2015 were 1,182,681