Weekly updates on the economy and housing
September 23, 2022
Weekly data summary:
- I’m George Ratio, Director of Economic Research at Realtor.com.
- Welcome to autumn! The changing leaves transform the landscape into a colorful texture and fill the air with the scent of pumpkin spice.
- The economy continues to show signs of modest growth, with resilient consumer spending and a strong labor market.
- This week’s jobless claims numbers confirmed the fact that demand for labor remains strong. At the same time, inflation continues to be at its highest level in 40 years, adding financial pressures to families struggling with the affordability of housing.
- This was the main topic at this week’s Federal Policy Committee meeting. Not surprisingly, the central bank voted to raise the interest rate on short-term funds by another 75 basis points and reiterated its commitment to bring inflation down to 2%. Additionally, President Powell stated in his follow-up remarks that housing needs to be corrected in order to rebalance the markets.
- For real estate, the Fed’s decision means that interest rates are expected to continue rising over the next few months.
- Mortgage rates have followed suit this week, jumping more than 6%, to the highest level since October 2008. An average-priced home buyer, at today’s rate and with a 30-year mortgage, is looking for a monthly payment nearly $900 higher than a year past, which adds more than $10,000 to the annual financing burden.
- With homebuyers pressed against the fiscal ceiling, existing home sales fell for the seventh consecutive month and August sale prices have fallen from their June peak. Transactions have been contracted into every price bracket, from entry level all the way to luxury.
- The general decline in housing activity was also reflected in the housing construction sentiment index, which fell again in September. Almost a quarter of construction companies lower prices to attract buyers.
- The pessimistic view of housing has extended to new construction activity. While housing starts to rebound in August, mostly due to strong activity in the multi-family sector, new home permits sank, and even the pace of completion has taken a step back.
- With fewer homes likely to come to market in the next few months, inventory will remain constrained and impede the pace of rebalancing.
- This was also highlighted by Realtor.com’s latest weekly update. With homeowners worried they might miss the peak of the market, new listings fell for the eleventh consecutive month.
- This week, we also released our August rent report, which confirms that affordability is getting worse. While average rent has fallen from last month’s high, it has taken a larger share of typical household income, just as families are manipulating higher prices and lower borrowing costs and wages behind inflation.
- Stay healthy this week! We’ll keep you posted on our website and Twitter feed, until the update next week.
- You’ll find the details along with Housing data for download from realtor.com/research. and follow us Twitter For real time updates.
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