The Line: Economic News of the Week

3 Min Read

Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.

It's been a slow week for economic and housing data, so welcome to the quick-hit edition of The Line.

Economic News of the Week

  • The services sector of the U.S. economy grew faster than expected in January. The Institute for Supply Management’s service-activity index rose to 53.4 last month, from 50.5 in December. Since the services sector is about 75% of Gross Domestic Product, this is good news for the economy.

  • Initial claims for unemployment fell by 9,000 to 218,000 last week. Despite the constant headlines about layoffs, we’ve yet to see any significant uptick in jobless claims.

  • According to the Federal Reserve Bank of New York, credit card balances rose 5% to a record $1.13 trillion in the fourth quarter of 2023. Since reaching a recent low of $770 billion in the first quarter of 2021, credit card debt has jumped 47%. Perhaps more shocking than that is the more than 50% increase in credit card delinquencies last year. Both these numbers shouldn’t too surprising, as consumers have been forced to use their credit cards more to keep up with inflation.

Housing News of the Week

  • Rates for 30-year conventional mortgages ticked up to 6.64% this week. After plunging 1.18% in the last two months of 2023, rates have stayed within a narrow range of 6.60%-6.69% this year. The reason rates stopped falling was all the better-than-expected economic data that’s come out in 2024. This has led the Fed to warn markets not to expect any rate cuts just yet, which has kept mortgage rates steady. I expect that to change in the coming months, so look for lower mortgage rates starting in the second quarter.

  • According to the National Association of Realtors 4Q23 market report, home prices are still rising in 85% of U.S. cities. While it’s not a big surprise prices are still rising in the U.S.—there’s nowhere near enough inventory out there—it may be surprising that it’s such a high percentage of markets. Another interesting tidbit in the report was that eight of the ten highest priced housing markets in 4Q23 are in California.

Here were the 10 priciest markets in 4Q23, along with their median prices:

  1. San Jose-Sunnyvale-Santa Clara, Calif.: $1,750,300

  2. Anaheim-Santa Ana-Irvine, Calif.: $1,299,500

  3. San Francisco-Oakland-Hayward, Calif.: $1,251,000

  4. Urban Honolulu: $1,069,400

  5. Salinas, Calif.: $993,900

  6. San Diego-Carlsbad, Calif.: $931,600

  7. Oxnard-Thousand Oaks-Ventura, Calif.: $916,800

  8. San Luis Obispo-Paso Robles, Calif.: $912,100

  9. Los Angeles-Long Beach-Glendale, Calif.: $884,400

  10. Boulder, Colo.: $849,400

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