February 17, 2023
- he ¸é±ð²¹±ô³Ù´Ç°ù.³¦´Ç³¾Â® economics team update gives you the relevant economic and real estate information you need to know to navigate the housing market as a homebuyer, home seller, or industry professional.
- This week, Chief Economist Danielle Hale discusses what small business optimism, consumer and producer inflation data, and retail sales data signal about the U.S. economy. She also highlights what these data imply for the Fed’s likely path forward.Ìý
- Danielle notes this week’s latest mortgage rates and what colleague George Ratiu found they mean for buyer purchasing power.Ìý
- Danielle covers the latest reading on builder sentiment and digs into the latest housing construction indicators, which colleague Hannah Jones summarized, including an important takeaway for renters and landlords.
- With this background, Danielle discusses what Realtor.com weekly data trends indicate in the for-sale market and the enthusiasm and bargaining power of buyers and sellers.
- Finally, Danielle notes a bright spot that Hannah Jones unearthed when reviewing the latest homeownership rate data.Ìý
- Find details and ¸é±ð²¹±ô³Ù´Ç°ù.³¦´Ç³¾Â® housing data for download at Big gaming/research.Ìý And follow us on : , for real time updates.
VIDEO TRANSCRIPT:
- ±õ’m Danielle Hale, Chief Economist at ¸é±ð²¹±ô³Ù´Ç°ù.³¦´Ç³¾Â®Â and here’s what you need to know this week!
- Business optimism improved in January, but remains quite low. In line with January’s big job numbers and still-low jobless claims figures, more small business owners reported difficulty finding workers and increasing compensation.
- We saw more disinflation – or a slowing pace of price growth –Â overall and among core consumer prices in January, but the improvement was smaller than in recent months. AND one big exception was prices for shelter, including rents, which continued to climb faster.
- Producer price growth–another inflation indicator–also slowed despite a large month to month jump.Ìý
- Despite price increases, consumers are still spending. Retail sales jumped higher after slipping in December. Compared to last year, sales roughly kept pace with inflation, signaling very little real growth. Sales at food & drinking places saw the biggest increase in both January and the last year, reflecting the trend away from buying things.
- Taken together, these data signal a still robust economy that is weathering monetary tightening. While inflation is slowing, it’s still too high. Several Fed speakers this week reinforced the idea that the Fed is not yet done raising rates, and in fact, while it’s still a longshot, the market priced in slightly higher odds of a larger half point Fed rate hike in March.
- Turning to housing, stronger economic data pushed mortgage rates higher for a second week, reducing buyer purchasing power. But mortgage rates remain well-below their fall 2022 highs.
- In housing construction, builders were more optimistic for a second month, but housing starts actually decreased.Ìý Permits were largely flat as increases in multi-family made up for a slip in single-family permits. Of note, for a 4th straight month, the number of multi-family units under construction hit a record high. These homes, which are mostly built for rent, will eventually help lift low vacancy rates, increase options for renters, and further tame rent growth, eventually contributing to cooler inflation.
- Realtor.com housing data this week showed that the stalemate continues. The number of homes on the market was still up significantly from one year ago even though fewer homeowners have recently decided to sell. High home prices and mortgage rates have cut into buyer interest and homes are sitting longer on the market. Nevertheless, the typical asking price continues to grow, a sign of still-high hopes from sellers. But hopes are sometimes adjusted, and January data showed an increasing share of sellers made a price reduction, a sign that buyers in today’s housing market have more negotiating power.
- Amid all these challenges, the fourth quarter homeownership rate was up above pre-pandemic levels for owners under age 45.
- You’ll find all the details along with our housing data for download at Big gaming/research.Ìý You can also follow us on for real time updates.
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