Companies know that consumers will notice an increase in price for the same product, so another method to increase profit is to charge the same amount but shrink the volume of the product. A sneaky method of passing on a price increase to the consumer whose inception is attributed to candy bar vending machines selling smaller chocolate bars for the same 0.05$ price when the cost of chocolate increased. Products from Tillamook Ice Cream to Royal Canin Catfood An entire thread on Reddit is devoted to this phenomenon.

Rates – improved slightly this week as Mortgage Backed Securities (MBS) continued their month-long upward trend. Rates are down approximately 1/8% from this time last year.


Jobs – the number of folks filing for unemployment for the first time was unchanged from the previous week at a level nearly double pre-pandemic levels. There are 14.2 M individuals still receiving some type of unemployment benefits (down a bit due to 22 states cancelling extended benefits) and there is a record 9.2M job openings.

Appreciation – the Core Logic Home Price Index report for the month of May that Nationwide prices increased over 2.3% in a single month and 15.4% from the previous May. They forecast much slower appreciation over the next year, but they also forecasted depreciation last year and are conservative in their predictions. Idaho led all states in appreciation with a 30.3% year over year gain while Oregon was number 10 at 17.6% Not a single state posted an annual decline in home prices.

Inventory has been declining for the past decade. While the number of households has steadily increased by approximately 10M over the previous decade the number of homes for sale has declined by over 2M. Over the last decade the areas with the largest home appreciation are areas where employment gains outpaced new construction growth.

Fed – the minutes from the Fed meeting last month showed that some members are in favor of tapering the purchase of MBS while some want to taper both MBS & Treasury purchases simultaneously (the later version would be better for rates). They mentioned they would give notice well in advance if they decide to slow down their purchasing.

Mortgage Applications for purchase transaction are down 1% from the previous week and 14% year over year. The decline is largely due to increase of cash buyers and lack of inventory. Refinances are down 2% and 8% year over year.

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