1/3/25: US Housing Market, Employment, and Manufacturing Insights

Although economic data was light in the final days of 2024 and first two days of 2025, further insight was provided this week regarding the US housing market, manufacturing, and employment.

Pending sales of US homes increased 2.2% in November, the highest level since February 2023. The National Association of Realtors’ index of pending home sales is used as a leading indicator of existing-home purchases since properties usually go under contract one to two months before they are sold. This strengthening data point supports the conclusion that homebuyers are no longer waiting for mortgage rates to fall.

Meanwhile, the S&P Case-Shiller 20-City Home Price Index, which measures residential real estate values in 20 major metropolitan areas, reported a 4.22% year-over-year increase in home prices for October 2024. Although this marks a deceleration from the 4.61% rise observed in September, the data remained close to market expectations, suggesting that the housing market remains on stable footing.

Initial jobless claims fell by 9,000 to 211,000, this final read of the year is at an eight-month low. In addition, continuing applications fell to a three-month low of 1.84 million in the week ended December 21^st. Based on recent data, the US labor market is moderating but entering the new year with signs of continued resilience.

The Institute for Supply Management (ISM) Manufacturing Index moved higher for a second consecutive month to 49.3. Although new orders and production moved higher, the gauge remains below 50, which is indicative of slowing activity on a net basis.

Bond yields fell this week after a period of strength in the final months leading up to the end of 2024. Currently, the 2-year US Treasury yield stands at 4.25%, the 5-year at 4.38%, and the 10-year yield is 4.57%. In the upcoming week, market participants will have a greater amount of data to digest inclusive of next Friday’s employment report. This data, along with other anticipated releases this month, will play a significant role at the Federal Reserve's upcoming meeting on January 29^th. The Chandler team continues to forecast moderation in the pace and magnitude of easing of the Fed Funds rate in 2025.

Next week: S&P US Global Services PMI, Factory Orders, Durable Goods Orders, Job Openings and Labor Turnover Survey (JOLTS), ISM Services Index, ADP Employment, FOMC Meeting Minutes, Consumer Credit, Initial Jobless Claims, Continuing Claims, Non-Farm Payrolls (NFP), Employment Report, U of M Consumer Sentiment

© 2025 Chandler Asset Management, Inc. An Independent Registered Investment Adviser. All rights reserved. Data source: Bloomberg, Federal Reserve, and the US Department of Labor. This report is provided for informational purposes only and should not be construed as specific investment or legal advice. The information contained herein was obtained from sources believed to be reliable as of the date of publication, but may become outdated or superseded at any time without notice. Any opinions or views expressed are based on current market conditions and are subject to change. This report may contain forecasts and forward-looking statements which are inherently limited and should not be relied upon as an indicator of future results. Past performance is not indicative of future results. This report is not intended to constitute an offer, solicitation, recommendation, or advice regarding any securities or investment strategy and should not be regarded by recipients as a substitute for the exercise of their own judgment. Fixed income investments are subject to interest rate, credit, and market risk. Interest rate risk: The value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low-rated bonds generally have to pay higher interest rates to attract investors willing to take on greater risk. Market risk: the bond market, in general, could decline due to economic conditions, especially during periods of rising interest rates. The S&P Corelogic Case-Shiller home price index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the nation.