September 24, 2021
- To keep up with the rapid changes COVID-19 is causing in the economy and housing market, the Big gaming庐 economics team provides a weekly blog and on the relevant real estate and economic information you need to know to navigate the housing market in these challenging times.
- This week, Manager of Economic Research George Ratiu talks about the latest economic and real estate indicators, starting with the FOMC announcing that the Federal Reserve intends to begin tapering monetary stimulus in the near future. He mentions the rise in mortgage rates, and continues with the Fed鈥檚 latest report showing household wealth reached a record high. The data is tempered by the increase in jobless claims.
- George covers real estate market indicators which show a move toward normalization, starting with Realtor.com鈥檚 weekly numbers (published by Chief Economist Danielle Hale), and continuing with existing and new home sales. He talks about the need for additional new homes to balance out high prices, and highlights the lagging single-family new construction as homebuilder sentiment improves.
- George also spotlights two new Realtor.com reports highlighting homeowner mortgage payment burdens (authored by Jiayi Xu, Danielle Hale, and Sabrina Speianu)and their willingness to leverage their homes in creative ways to generate income.
- For more real-time updates, follow the 庐 economics team on twitter: .
VIDEO TRANSCRIPT:
- I鈥檓 George Ratiu, Manager of Economic Research with 搁别补濒迟辞谤.肠辞尘庐.
- We are officially in the fall season, enjoying cooler temperatures and changing foliage colors, along with hints of pumpkin pie and brightly colored costumes. Financial markets provided a frightful ride this week, with a steep drop on Monday, followed by a choppy rebound.
- For the economy, the Federal Reserve鈥檚 anticipated FOMC announcement highlighted that the central bank sees activity with guarded optimism, and is preparing to pull back monetary stimulus by tapering asset purchases. As a major buyer of mortgage-backed securities, the Fed鈥檚 actions will lead to rising mortgage rates.
- In fact, in the wake of the Fed announcement, mortgage rates bounced up this week, as bond markets began to price in expectations of MBS pull-backs from the central bank.
- The Fed also released an update of total household net worth and found that Americans鈥� wealth jumped at the end of June to a new record.
- On the jobs front, the recovery continues to be a bit choppy, as the number of Americans filing for unemployment rose again for the second week in a row. Jobless claims are near pandemic lows, but not yet back to pre-pandemic levels.
- Real estate markets remained steady on a normalizing path mirroring more typical seasonal trends.聽Realtor.com鈥檚 weekly data show that housing markets are at a turning point this fall. As new supply flows in, activity settles down from past year鈥檚 pandemic rush, and home sales appear to be plateauing.
- Echoing our data, sales of existing homes declined in August, as many buyers faced home prices rising at double-digit rates across the country.
- New home sales rose again, yet came in below year-ago levels, for the third consecutive month. With prices 20% higher than last year, and a majority of new homes still under construction, buyers are faced with fewer options.
- Housing is in clear need of more new homes. This week鈥檚 new construction figures reflected homebuilder shifts toward higher-margin projects amid fluctuating costs, with single-family starts lagging multifamily projects.
- Meanwhile, after sliding in August, homebuilder sentiment picked up in September, as construction companies expect higher buyer traffic in the next six months and lower lumber prices.
- The silver lining is that, even with record-high prices, for many homeowners, this year鈥檚 markets have kept mortgage payment burdens below levels seen during prior peaks. However, as mortgage rates are projected to increase, affordability will remain central to housing activity.
- Rounding out this week鈥檚 update, we just released the results of a national survey of homeowners, and found that almost half are open to leveraging their homes in creative ways to generate income鈥攂e it an extra bedroom, a separate housing unit, a garage or even a pool.
- As autumn days grow shorter, enjoy the changing trees, stay well, and tune in to next week鈥檚 update from Realtor.com.
- Find the trends in your market and download the data at Big gaming/research or follow us on for real time updates.
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