Vital Statistics:
Stocks are higher after we got some benign inflation data. Bonds and MBS are up.
Personal incomes rose 0.9% MOM in January, according to the BEA. Personal spending fell by 0.2%. The PCE Price Index rose 0.3% month-over-month and 2.5% year-over-year. If you exclude food and energy, the PCE Price Index rose 0.3% MOM and 2.6% YOY.
The inflation numbers were more or less in line with street expectations, with the headline monthly rate a touch below expectations. The income number was way above expectations, while the spending number was way below. While one data point doesn’t define a trend, it looks like progress on inflation has started again.
The increase in income was driven primarily by government transfer payments, which was the cost-of-living increase in social security. The decrease in spending was primarily attributable to a decrease in motor vehicles.
Pending home sales fell 4.6% in January, according to NAR, which set an all-time low for the index which goes back to 2021. “It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months,” said NAR Chief Economist Lawrence Yun. “However, it’s evident that elevated home prices and higher mortgage rates strained affordability.” In the south, pending home sales fell 9%, while the rest of the country was up or down a percent or so.
Rates increased in January, however with rate back down, this issue should reverse.
Notwithstanding the drop in sales, the inventory of homes for sale increased 27.5% in February. Listing prices were down about 0.8% compared to a year ago.
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