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Existing Home Sales Decline as Inventory and Mortgage Rates Rise

August 23, 2023

United States Existing Home Sales

On Tuesday, the National Association of Realtors announced that existing-home sales receded in July, Among the four major U.S. regions, sales grew in the West but faded in the Northeast, Midwest and South. All four regions registered year-over-year sales declines.

Total existing home sales completed transactions – that include single-family homes, townhomes, condominiums and co-ops – waned 2.2% from June. Year-over-year, sales slumped 16.6%.

• Total housing inventory registered at the end of July was 1.11 million units, up 3.7% from June but down 14.6% from one year ago (1.3 million).
• Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 3.1 months in June and 3.2 months in July 2022.
• The median existing-home pricefor all housing types in July was $406,700, an increase of 1.9% from July 2022 ($399,000).
• Properties typically remained on the market for 20 days in July, up from 18 days in June and 14 days in July 2022.
• Seventy-four percent of homes sold in July were on the market for less than a month.

30-Year Mortgage Rates Up Over 7%

According to Freddie Mac, the 30-year fixed rate mortgage  averaged 7.09% as of August 17. That’s up from 6.96% the prior week and 5.13% one year ago.

Single-family and Condo/Co-Op Sales

• Single-family home sales slid in July, down 1.9% from June and 16.3% from the previous year. The median existing single-family home price was $412,300 in July, up 1.6% from July 2022.
• Existing condominium and co-op sales also slid in July, down 4.5% from June and 19.2% from one year ago. The median existing condo price was $357,600 in July, up 4.5% from the previous year ($342,200).

Regional Breakdown

Existing-home sales in the Northeast descended 5.9% from June to an annual rate of 480,000 in July, down 23.8% from July 2022. The median price in the Northeast was $467,500, up 5.5% from one year ago.

In the Midwest, existing-home sales decreased by 3.0% from the prior month to an annual rate of 960,000 in July, dropping 20.0% from the previous year. The median price in the Midwest was $304,600, up 3.9% from July 2022.

Existing-home sales in the South retracted 2.6% from June to an annual rate of 1.86 million in July, a decrease of 14.3% from one year ago. The median price in the South was $366,200, up 1.7% from July 2022.

In the West, existing-home sales increased 2.7% from the previous month to an annual rate of 770,000 in July, down 12.5% from the prior year. The median price in the West was $610,500, unchanged from July 2022.

Staying Physically (and Fiscally) Fit as You Age

August 9, 2023

Keep connected, develop good sleep hygiene and get in fiscal shape

Aging is a natural process that everyone goes through, but how we age can be significantly influenced by our daily habits. Staying fit and healthy as we grow older is not just about physical exercise, though that plays a crucial role. Experts emphasize that it’s also about focusing on mental well-being, maintaining social connections, and prioritizing good sleep hygiene.

Exercise for the Body and Brain

Physical Exercise: Engaging in regular physical activity helps to maintain muscle mass, flexibility, and cardiovascular health. It can also reduce the risk of chronic conditions like obesity, diabetes, and heart disease. Whether it’s walking, swimming, or practicing yoga, find an exercise routine that suits your abilities and preferences.

Cognitive Exercise: Just as the body needs exercise, so does the brain. Mental exercises like puzzles, reading, or learning a new skill can sharpen cognitive function and ward off memory-related ailments like dementia. Never stop challenging and engaging your mind.

Related article: How to Preserve and Grow Your Family’s Legacy

Strive for Mental Fitness

Mental fitness goes beyond cognitive exercises. It encompasses emotional well-being, resilience, and overall psychological health. Engaging in activities that bring joy and purpose, practicing mindfulness, and seeking professional help if needed, can keep your mind in top shape. Staying fit and positive mental health supports overall well-being and can even enhance immune function.

Staying Fit Socially

Humans are social creatures, and staying connected to friends and family is essential for emotional health. Social interactions stimulate the brain and enhance feelings of happiness and fulfillment. Joining clubs, volunteering, or simply maintaining regular contact with loved ones can foster a strong social network. Remember, quality is often more valuable than quantity when it comes to social connections.

Develop Good Sleep Hygiene

Sleep is a vital but often overlooked aspect of overall health. Good sleep hygiene means creating a conducive environment for sleep, establishing a regular sleep schedule, and avoiding things that might disrupt sleep patterns (such as screens or caffeine close to bedtime).

Aging might come with changes in sleep patterns, but maintaining a healthy sleep routine can have profound impacts on physical and mental health. Adequate rest supports cognitive function, mood regulation, and overall wellness.

Not Just About Staying Fit at the Gym

A holistic approach to staying fit as you age encompasses more than just hitting the gym. These habits aren’t just for those in their golden years either; starting early can lay the foundation for a robust and resilient aging process.

Regular check-ins with healthcare professionals who understand your individual needs can further support these habits. Ultimately, the journey of aging is unique to each person, and cultivating these habits can make that journey a fulfilling and healthy one.

Your Financial Advisor

A good advisor will spell everything out for you in ways that you understand. After all, it is your future that you are working on. If your doctor or advisor shoos you out without explaining problems and solutions, you can find a better one.

Decision-making in both areas changes with circumstances and works best with consistent, objective planning. Just as your health changes over time, markets and economies change even faster. 

• Your financial advisor is there to discuss your future and be a sounding board for your career. 
• Your financial advisor can help you maintain a healthy lifestyle. 
• Your financial advisor will be there for to help you get in – and stay in – fiscal shape. 

Your financial advisor is always there to care for your financial well-being, but also your emotional well-being. Always.

Tax-Efficient Wealth Building: Strategies to Maximize Your Returns

August 2, 2023

Tips to Keep More of Your Hard-Earned Money Working for You

When it comes to preparing for a financially secure future, utilizing tax-efficient wealth building strategies can help you make the most of your assets. In fact, one often overlooked aspect of wealth building is the impact of taxes on investment returns. Implementing tax-efficient strategies can help you minimize tax liabilities and keep more of your hard-earned money working for you. In this article, we will explore various strategies that can optimize your investment returns and help you on your journey to tax-efficient wealth building.

Understand Tax-Advantaged Accounts

One of the foundational strategies for tax-efficient wealth building is leveraging tax-advantaged accounts. Familiarize yourself with options such as Individual Retirement Accounts (IRAs), 401(k) plans, Health Savings Accounts (HSAs), and 529 education savings plans. These accounts offer tax advantages, such as tax-deferred growth or tax-free withdrawals, allowing your investments to grow more efficiently.

Capitalize on Tax-Deferred Investments

Investing in tax-deferred vehicles can have a significant impact on your long-term wealth accumulation. Explore options like traditional IRAs, 401(k) plans, and deferred annuities. By deferring taxes on investment gains until withdrawal, you can potentially benefit from compounding growth and keep more of your returns working for you.

Utilize Tax-Efficient Asset Location

Strategic asset location involves placing different types of investments in the most appropriate accounts to optimize tax efficiency. For example, high-growth assets that generate significant capital gains may be best held in tax-advantaged accounts to defer taxes, while tax-efficient investments like index funds or tax-managed funds can be placed in taxable brokerage accounts. If you’re unsure about the tax treatments of different types of accounts, work with a financial advisor or tax professional to determine the most tax-efficient wealth-building strategies for your personal circumstances.

Harvest Tax Losses

Tax-loss harvesting involves strategically selling investments that have experienced losses to offset taxable gains. By realizing losses, you can reduce your tax liability while maintaining a similar investment position by reinvesting in similar assets. Careful consideration of tax rules and restrictions is crucial to ensure compliance and maximize the benefits of tax-efficient wealth building strategies like this one.

Long-Term Investing for Capital Gains

Holding investments for the long term can have substantial tax advantages. Capital gains from investments held for more than one year are subject to lower long-term capital gains tax rates. By adopting a long-term investment strategy, you can take advantage of these preferential tax rates and enhance after-tax returns.

Consider Tax-Efficient Investment Vehicles

Certain investment vehicles, such as exchange-traded funds (ETFs) or index funds, are designed to be tax-efficient. These funds aim to minimize taxable distributions by minimizing portfolio turnover or using in-kind transfers. Exploring these options can help you reduce taxable events and improve overall tax efficiency.

Charitable Giving

Charitable giving may strike you as an odd addition to a list of tax-efficient wealth building strategies, but these types of contributions offer potential tax benefits while supporting causes you care about. Consider donating appreciated securities directly to charitable organizations instead of cash. By doing so, you can potentially avoid capital gains taxes and still claim a deduction for the fair market value of the donated assets.

Related Article: Five Charitable Gifting Strategies That Come With Tax Advantages

Seek Professional Guidance

Navigating the complexities of tax-efficient wealth building can be challenging, and some of the above strategies may leave you feeling confused or overwhelmed if you try to go it alone. Consider working with a knowledgeable financial advisor or tax professional who can provide personalized guidance based on your unique financial situation. They can help you identify and implement the most effective tax strategies and ensure compliance with tax laws.

Are You Utilizing Tax-Efficient Wealth Building Strategies?

Building wealth requires a comprehensive approach that includes optimizing your investment returns while minimizing tax liabilities. By implementing tax-efficient wealth building strategies such as leveraging tax-advantaged accounts, capitalizing on tax-deferred investments, and utilizing strategic asset location, you can enhance your after-tax returns and accelerate your wealth-building journey. By making tax efficiency a priority, you can keep more of your wealth working for you and achieve greater long-term financial success.

If you’d like to discuss strategies for tax-efficient wealth building, contact Lane Hipple Wealth Management Group at our Moorestown, NJ office by calling 856-638-1855, emailing info@lanehipple.com, or to schedule a complimentary discovery call, use this link to find a convenient time.

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EQUITIES ADVANCE LAST WEEK AS THE FED RAISES RATES BY 25 BASIS POINTS

July 31, 2023

CORPORATE EARNINGS COME IN BETTER THAN EXPECTED

Summary

• The small-cap Russell 2000 (+1.1%) recorded another positive week, followed closely by the S&P 500 (+1.0%) and the DJIA (+0.7%)
  
• There was a lot of economic news last week, but by far the biggest news was probably also the most expected, when the Fed voted on Wednesday to raise the target range for the fed funds rate by 25 basis points to 5.25-5.50%
  
• Surprisingly, Wall Street reacted well to the expected rate hike, on hopes that the Fed is done raising rates for the year, as the CME FedWatch Tool put the probability of a second rate hike any time later this year at less than 30%
  
• It was a busy earnings week, too, with Microsoft, Google (Alphabet) and Facebook (Meta) all moving decently
  
• Of the 11 S&P 500 sectors, 9 were positive as the Communication Services led the pack with a whopping 6.9% gain, whereas Utilities and Real Estate dropped by about 2% each
  
• The 10-year Treasury yield moved up 11 basis points and came to rest at 3.96%, a whisper away from that 4% threshold so important to Wall Street

Weekly Market Update – as of JULY 28, 2023

*Source: Bonds represented by the Bloomberg Barclays US Aggregate Bond TR USD.

This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results

Stocks Advance as Fed Raises Rates

Stocks had a good week, as all four of the major U.S. equity indexes advanced on hopes that a soft landing engineered by the Federal Reserve was becoming real. Most encouraging for investors was the fact that the DJIA saw its 13^th consecutive daily gain through Wednesday, marking its longest winning streak since 1987. Growth stocks far outpaced Value stocks, driven by NASDAQ’s 2% gain, which padded its 36%+ YTD gain.

The week’s biggest news was widely anticipated, as the Federal Reserve voted unanimously on Wednesday to raise the fed funds rate by 25 basis points, after pausing last month. Fed Chair Jerome Powell was non-committal about whether rates would be raised further, but he did acknowledge that inflation is far from its most-recent peak. The fed futures market is predicting that there will be about a 30% chance of another rate hike later this year.

There was a lot of economic data received last week and here are a few highlights:

• Q1 GDP revised up significantly;
  
• New home sales jumped in May;
  
• New home sales prices declined in May;
  
• Durable goods orders advanced in May;
  
• Consumer confidence leapt in July;
  
• Personal income increased in May;
  
• Personal spending rose in May;
  
• Wages and salaries increased in May;
  
• Initial jobless claims dropped last week

GDP Revised Up Significantly

The third estimate for Q1 GDP saw a very large, upward revision to 2.0% from 1.3%, as consumer spending proved to be much more robust than anticipated.

Highlights

• Personal consumption expenditures growth was revised to 4.2% from 3.8%. That contributed 2.79 percentage points to Q1 GDP growth versus the second estimate of 2.52 percentage points.
  
• Gross private domestic investment declined 11.9%, versus the second estimate of -11.5%, after increasing 4.5% in Q4. This subtracted 2.22 percentage points from GDP growth versus 2.14 percentage points in the second estimate.
  
• Exports were up 7.8%, versus the second estimate of 5.2%, after declining 3.7% in Q4. Imports were up 2.0%, versus 4.0% in the second estimate, after declining 5.5% in Q4. Net exports contributed 0.58 percentage points to Q1 GDP growth versus the second estimate of 0.00 percentage points.
  
• Government spending increased 5.0%, versus the second estimate of 5.2%, after increasing 3.8% in Q4. This added 0.85 percentage points to Q1 GDP growth versus 0.89 percentage points in the second estimate.

New Home Sales Jump in May But Sales Prices Decline

New home sales surged 12.2% month-over-month in May to a seasonally adjusted annual rate of 763,000 units. On a year-over-year basis, new home sales were up 20.0%, but the median sales price declined 7.6% year-over-year to $416,300 while the average sales price declined 6.6% to $487,300.

In addition:

• New home sales month-over-month/year-over-year by region:
  
  • Northeast (+17.6%/+110.5%);
  • Midwest (+4.1%/+40.0%);
  • South (+11.3%/+22.0%);
  • West (+17.4%/-0.6%).
    
• At the current sales pace, the supply of new homes for sale stood at 6.7 months, versus 7.6 months in April and 8.3 months in May 2022.
  
• The percentage of new homes sold for $399,999 or less accounted for 44% of new homes sold versus 49% in April and 39% one year ago.

Durable Goods Orders Are UP

Total durable goods orders were up 1.7% month-over-month following an upwardly revised 1.2% increase (from 1.1%) in April. Excluding transportation, durable goods orders increased 0.6% month-over-month following a downwardly revised 0.6% decline (from -0.2%) in April.

Highlights

• New orders for machinery jumped 1.0% after increasing 0.3% in April.
  
• New orders for computers and electronic products increased 0.3% after declining 1.8% in April.
  
• New orders for fabricated metal products were flat after declining 0.2% in April.
  
• Transportation equipment orders jumped 3.9% after increasing 4.8% in April. New orders for motor vehicles and parts were up 2.2% after being flat in April. New orders for nondefense aircraft and parts rose 32.5% after slipping 2.0% in April.
  
• Shipments of nondefense capital goods excluding aircraft, which factors into GDP computations, increased 0.2% following a 0.4% increase in April.

Sources: conference-board.org; bea.gov; census.gov;  msci.com; fidelity.com; nasdaq.com;  wsj.com;  morningstar.com

Consumer Confidence Up 2nd Month in A Row To Best Level Since July 2021

July 25, 2023

The Consumer Confidence Survey from the Conference Board “reflects prevailing business conditions and likely developments for the months ahead.”

This monthly Consumer Confidence report details consumer attitudes, buying intentions, vacation plans, and consumer expectations for inflation, stock prices, and interest rates. Data are available by age, income, 9 regions, and top 8 states.

On Tuesday, it was announced that the Conference Board Consumer Confidence Index rose again in July to 117.0 (1985=100), up from 110.1 in June.

Further:

• “The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – improved to 160.0 (1985=100) from 155.3 last month.
 
• The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – improved to 88.3 (1985=100) from 80.0 in June.
 
• Importantly, Expectations climbed well above 80 – the level that historically signals a recession within the next year. Despite rising interest rates, consumers are more upbeat, likely reflecting lower inflation and a tight labor market. Although consumers are less convinced of a recession ahead, we still anticipate one likely before year end.

Consumer confidence rose in July 2023 to its highest level since July 2021, reflecting pops in both current conditions and expectations. Headline confidence appears to have broken out of the sideways trend that prevailed for much of the last year. Greater confidence was evident across all age groups, and among both consumers earning incomes less than $50,000 and those making more than $100,000.”

Family’s Current Financial Situation

Consumers’ assessment of their Family’s Current Financial Situation signals still-healthy family finances in July.

• 31.6% of consumers say their current family financial situation is “good,” up from 28.8% in June.
 
• 17.6% say their current family finances are “bad,” down from 18.6%.

Sources: conference-board.org