Rocket Fuel Newsletter – Economic data vs. consumer sentiment

Feeling sluggish in the afternoon? Consider taking a nap: A recent study suggests the perfect time for a nap is at 1:42 pm. But beware – snoozing too long can land you in the dreaded “danger zone.”

This week, we dive into mortgage application trends, HUD disaster aid, and the dissonance between economic markers and consumer perceptions.

Fuel up! 🚀  

Local regulations drive up rent

A new study from the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC) finds that renter protection laws such as eviction regulations, source-of-income laws, and limits on resident screening often lead to higher costs for multifamily housing providers, contributing to rising rates.

While these policies aim to promote housing equity, they can also discourage new construction and reduce long-term affordability. In contrast, state preemption laws, which standardize regulations, improve financial stability and encourage reinvestment in housing.

Read more about the findings of the study here.

Mortgage application trends

Mortgage applications decreased by 1.2% in late February, with refinance activity seeing a slight decline despite lower interest rates, according to the Mortgage Bankers Association (MBA). Meanwhile, home buyer affordability worsened in January, as the national median mortgage payment rose to $2,205, reflecting higher loan amounts and mortgage rates.

While purchase applications remained flat from the previous week, increasing for-sale inventory could provide buyers with more options heading into the spring market.

Despite ongoing affordability concerns, the MBA forecasts a modest rise in home purchase activity for 2025.

HUD awards $2.5 million in disaster housing aid

The U.S. Department of Housing and Urban Development (HUD) has allocated nearly $2.5 million in Rapid Unsheltered Survivor Housing (RUSH) grants to assist individuals impacted by recent hurricanes and severe storms.

This funding aims to address unmet housing needs for those experiencing or at risk of homelessness, supplementing existing federal disaster relief efforts. HUD also continues to support technical assistance to ensure effective disaster recovery support.

Inflation has dominated the conversation over the past few years and rightfully so after rising to nearly 10% in 2022.

After a historic rate hiking cycle by the Fed, significant progress has been made to reduce inflation. It has been trending down and is approaching the 2% target set by the Fed.

However, public perception of inflation may differ. The Consumer Confidence Index dropped ~7% in February, the largest monthly drop in over 3 years (August 2021).

Stephanie Guichard, Senior Economist at The Conference Board, is quoted saying, “Average 12-month inflation expectations surged from 5.2% to 6% in February. This increase likely reflected a mix of factors, including sticky inflation but also the recent jump in prices of key household staples like eggs and the expected impact of tariffs.”

The price of eggs has surged by 47% since October. Although eggs are just one of many factors used to calculate inflation, their frequent purchase makes them especially noticeable, influencing people's perception of rising costs.

The spike in egg prices has made headlines and even forced Waffle House to act, adding a 50-cent surcharge per egg in February. Other restaurants, including Denny’s, have followed suit with their own egg surcharges.

Things could get worse before they get better for egg prices. According to the U.S. Department of Agriculture, prices are forecasted to rise by another 20% this year as the bird flu continues to put pressure on the egg supply.

While inflation as a whole may be trending down, if household items like eggs continue to rise in price, consumers are unlikely to feel like things are moving in a positive direction.

In the coming months, policymakers will need to balance economic progress with the everyday reality of consumers. Until consumers see relief in everyday expenses, the disconnect between economic data and consumer sentiment may persist, shaping both spending patterns and broader economic momentum.

Staying ahead means engaging with industry leaders and discovering what’s next. We’ll be at these events – let’s connect.

Join us for meaningful conversations, valuable insights, and new opportunities to drive your business forward. We look forward to seeing you there.

Three solvers finished in under 2 minutes, with the top solver being the only one who finished in less than a minute. Congrats to our winner last week, whose time of 54 seconds was the best of the week!

This week’s puzzle gets 3 Rockets out of 5.

Click here to solve!

Good luck!