Donald Trump will inherit, to all appearances, a solid economy when he assumes the presidency in January. After all, the stock market is at record highs, unemployment is low by historical standards and gross domestic product has been expanding at a healthy pace of around 2.5% so far this year.
Builders are an important part of any plausible fix for the housing shortage in the United States — not only constructing more homes but also finding ways to improve affordability.
It’s inevitable that the market dynamics that have delivered cheaper airfares, used cars and rents in the past year will eventually turn around. One high-profile reminder came from United Airlines’ earnings last week.
The Federal Reserve’s interest rate cut last week has led many to wonder what it means for mortgage rates. The housing website Redfin noted that some would-be homebuyers aren’t aware that we’ve already seen a steep decline, while others are waiting for mortgage rates to fall more.
There’s a puzzle developing in the housing market — mortgage rates have fallen rapidly to their lowest level since early 2023, but would-be homebuyers don’t seem to care. It’s possible this is just a timing issue with rates falling during the slow season for transactions and election jitters giving buyers additional reason to hold off.
American consumers have surprised many economists this year by continuing to spend even as their savings shrink and the labor market cools. They’ve been aided in part by pockets of deflation that have boosted their purchasing power on things such as gasoline, automobiles and airfares.
Chair Jerome Powell cemented a shift in focus from inflation to employment last week when he said that the Federal Reserve does not seek a further cooling in the labor market. It was a welcome message for those concerned about an economic slowdown. But there are reasons to expect today’s sluggish hiring environment to persist at least into early next year, frustrating job seekers and policymakers alike.
The worst of the housing affordability crisis is behind us. But the past two years have shown that housing isn’t a bubble that is likely to pop overnight, nor can prices be forced lower in the short term with government intervention. Rising incomes, falling mortgage rates, more construction and thoughtful policy will slowly chip away at the affordability problem.
The recent decline in mortgage rates on stronger evidence that the Federal Reserve is poised to ease policy has fueled hopes of better times ahead for companies tied to the housing market. That’s likely true, but the evidence of the past few weeks suggests it’s already too late for a revival this year.
Friday’s weaker-than-expected jobs report has sparked a robust debate about whether the economy is sliding into recession or whether the rise in the unemployment rate in July was due to a continuing post-pandemic normalization of the labor market.
When the Federal Reserve signals the likely path of monetary policy to investors this week, including an anticipated start to interest rate cuts in September, it can no longer be complacent about the labor market.
San Francisco has been the subject of a lot of negative press over the past several years. It was hit hard by the pandemic exodus from cities, the shift to work from home that emptied offices, the crime and homelessness that marred its national reputation, and pledges by corporate leaders such as Elon Musk to relocate their company headquarters elsewhere.
It’s been clear since the fall of 2022 that the housing market needed lower interest rates to fix many of its problems including a lack of affordability for buyers, the mortgage rate lock-in dynamic for homeowners, and reduced activity for companies ranging from Home Depot Inc. and Lowe’s Cos. to suppliers of building materials.
Between McDonald’s $5 value meal, Taco Bell’s $7 cravings box and budget breakfasts from Starbucks and Wendy’s Co., fast food chains are fighting hard to win over hungry Americans this summer. Why now? It comes down to price-sensitive customers voting with their wallets and forcing companies to chase traffic to grow revenue and profits.
New home construction slumped to the weakest level in four years in May, confirming a trend that’s been evolving for the past few months — residential construction is once again acting as a drag on economic growth in the US.
Lately the housing market has faced a different conundrum at every turn. This year’s puzzle is the disconnect between an aggressive rise in the number of existing homes for sale and still sluggish transactions.
When people think about the Federal Reserve and interest rates in 2024, one common view is that economic growth and inflation remain too hot to justify rate cuts. Another is that the labor market and inflation continue to cool, and it will soon be time for rate cuts.
The consumer price data last week showed a gradual deceleration in housing inflation. Economists expect this will persist for a while as official statistics slowly catch up to moderating market rents.
There is broad agreement that the US housing market needs more homes . There is also broad agreement that affordability needs to improve. But it doesn't necessarily follow that we should build more affordable homes.
As the Federal Reserve acknowledges a setback in its inflation fight, one question looms large: Why hasn’t the economy slowed the way policymakers expected?
It may seem counterintuitive to suggest that today’s high interest rates will fuel shelter inflation down the road. After all, the Federal Reserve has tightened monetary policy to stamp out price pressures in the economy.
he current state of the market for renters is akin to being in the eye of a multi-year hurricane. Rents surged in 2021 and 2022, driving a wave of apartment construction that helped to stabilize or even lower prices this year.
Homebuilders were one of the big surprise winners in the US economy last year as record-low inventory of existing houses for sale and gently rising prices allowed companies such as KB Home and Lennar Corp. to ramp up construction and maintain high profit margins. Both have said they expect more of the same in 2024 — they may be in for another surprise.
The timing and pace of Federal Reserve interest rate cuts will consume economists and market commentators for months to come. But an emerging story in 2024 is that lenders and borrowers are jumping the gun well in advance of any policy easing.
The pandemic years transformed wealth in the US, sowing the seeds of a new form of inequality.
If you need to sell your home in the next few months, I’d get on with it. As we enter the spring selling season, it’s becoming increasingly clear that the period during which sellers had the leverage in the housing market is over.
Slower inflation was supposed to be a sign that the economy was cooling, all part of the Federal Reserve’s plan for higher interest rates to restore balance to the economy. For a while, things looked on track.
Stocks and bonds rallied at the end of last year on the hope of a seemingly improbable combination of dynamics playing out to support financial assets in 2024 — cooling inflation, solid economic growth, a resilient labor market, and as much as 150 basis points of interest-rate cuts.
Economic growth in the US is off to a better start than expected this year, thanks largely to a long-awaited pickup in consumers buying “stuff” again after they shifted spending to experiences in 2022.
Corporate America has greeted 2024 with a run of job-cut announcements. The reductions, though modest, seem puzzling at a time when the stock market is flirting with all-time highs and real gross domestic product growth continues to be healthy.
I wrote last week about how interest rate cuts in 2024 should boost cyclical areas of the economy that were already set to rebound, lifting economic growth.
The key economic question for 2024 is how to think about the interest rate cuts we’re likely to get from the Federal Reserve. Are they good news for the economy as borrowers catch a break, or a sign of impending recession as they were in 2001 and 2007?
The “vibecession” that has confounded economists for the past two years is finally behind us.
Stronger signaling from the Federal Reserve that interest rate cuts are on the menu in 2024 understandably sent both stocks and bonds soaring on Wednesday.
Homebuyers have suffered some severe whiplash in recent months. After all, when mortgage rates hit 8% in late October, it was reasonable to think the housing market would stay on ice throughout the winter.
The unhappiness of American consumers despite rapid job and economic growth in the past few years is a hotly debated topic. Is it inflation? High borrowing costs for homes and automobiles? Crowded airports and packed airplanes?
Now that there’s a growing consensus that the Federal Reserve is done raising interest rates — a shift I predicted last month — it’s time to ponder when policymakers will consider cutting rates and by how much.
It’s important not to gloss over this reality because a number of signs point to a continuing deterioration so long as the Federal Reserve keeps interest rates at a level that restrains the economy.
The inflation scare is barely behind us, and it is already time for the Federal Reserve to focus on recession risks. The recent trajectory of job growth means policymakers can no longer rule out unemployment snowballing in 2024, which should force a shift in how they think about managing their dual mandate.
One consistent overhang in an otherwise pretty good year for the US economy has been tightening credit standards at banks.
For the first time since the Federal Reserve started raising interest rates, every part of the housing market is now poised to worsen.
Market pricing, verbal cues from Federal Reserve members and the likely evolution of the economic data over the next couple of months all point in the same direction — the central bank is likely done raising interest rates.
Economists, policymakers and politicians are used to there being two variables that serve as a scorecard for how the public feels about the economy — unemployment and inflation. A year ago, when inflation was at 40-year highs, public unhappiness made sense.
Home prices are once again on the rise following a brief decline.
Consumers might still be benefiting from inflation pressures abating, but the same is no longer true for corporations.
Arguably, the biggest question about the US economy right now is whether consumers can maintain their pace of spending. Student loan payments resume in October.
There’s a growing consensus that we need more housing and less office space as cities move forward with plans to transform themselves in a post-pandemic world.
The hope for the US resale housing market a year ago was that inflation would peak, interest rates would fall, and lower mortgage rates would help unfreeze the buying and selling of existing homes. That hasn't happened.
Halfway through the third quarter, the economy is looking surprisingly strong. A tracker from the Atlanta branch of the Federal Reserve has real gross domestic product growth, based on the limited data we've gotten so far, tracking at 5.8%, which would be the fastest for a non-pandemic quarter in 20 years.
Signs of slowing price pressures and wage growth have generated a lot of excitement about a soft landing for the US economy, where inflation glides back toward 2% without a painful recession.