"Buy a home? In this economy?" Home sales slump but it’s not all bad news.
What does it mean?
- Home sales have fallen to the third lowest level in a decade.1 Why? Mortgage rates are at historic highs and people don't want to move into a house with a higher mortgage rate. As a result, the number of available homes has been limited. Naturally, limited supply has led to higher home prices and diminished sales.
- Why do we pay attention to home sales? Home sales are one way of measuring the health of the economy. Additionally, the housing market is incorporated in gross domestic product (GDP), which measures overall economic activity.
- What might help reignite the housing market? We are beginning to see some positive signals: namely, a rally in bonds this month following a recent inflation report.2 Bond prices and yields move inversely, so a rise in bond prices pushes yields lower.3 This could be a good thing for the housing market because lower yields may put downward pressure on mortgage rates.
- Falling yields could have a positive effect on stocks because lower yields reduce borrowing costs for both businesses and consumers. The volatility in yields over the last year is one of the reasons we continue to believe in the benefits of a diversified portfolio approach.
Institutional Portfolio Manager, Strategic Advisers LLC
"As I think about the next few months, political rhetoric and news headlines will likely feel very intense. It is important to remember that markets rise and fall for all sorts of reasons. With my 20+ years of investing experience, I can tell you this kind of noise can be distracting. We’re going to tune out the noise and continue to focus on variables like earnings, jobs, and consumers. We take these variables and assess how they impact corporate profitability and global growth."
Who we are
For over 30 years, Strategic Advisers and its dedicated group of seasoned investment professionals have helped clients reach their financial goals. Our team of portfolio managers, with specialized areas of focus in asset allocation and specific asset classes, along with our deep quantitative and fundamental research, drive our investment selection and risk management decisions on behalf of our clients.