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.
In the spring of 2022, the US economy went through an abrupt shift as consumer spending moved from goods to services. Travel boomed. Retailers slumped. Warehouses overflowed with inventory no one wanted to buy, and factories and the freight industry went through a recessionary adjustment.
The story of US housing for hopeful buyers in 2023 has been one of frustration. A lack of supply has stabilized a market where affordability remains challenging.
Signs of abating inflation have lifted the spirits of investors, the White House and the general public this month. While a welcome relief, inflation tends to be a lagging rather than a leading economic indicator.
The housing market is full of surprises. Sentiment among homebuilders has been perking up, their stocks are surging, and new home sales are at the strongest since early 2022. All in the face of persistently high mortgage rates.
Regardless, the rental boom that began in the aftermath of the 2008 financial crisis is likely over, having peaked in the middle of 2022.
The spring of 2022 was rough for the US economy. Markets plunged while inflation spiked. “Stagflation” was the word of the day, and for a period of time, there was some merit to that outlook.
Homebuilders continue to finish homes faster than they’re starting new ones. Improved supply chains are allowing them to work through backlogs built up during the pandemic when they couldn’t keep up with demand.
We’ve been watching slumps ripple through various parts of the economy over the past 18 months: technology startups and stocks, regional banks and growing concern about commercial real estate. Yet we’re still waiting for the wider labor market to feel the downturn.
After 30-year mortgage rates surged past 7% in October, a decline to near 6% in recent weeks has made the start of 2023 look less awful than some had feared.
One of the main questions for the US economy in 2023 is how the trajectory of inflation will unfold.
For most of the past year, investment risk in the housing market has been focused on the for-sale segment.
Inflation was the bogeyman of 2022.
While remote work trends have persisted, recent data released by the US Census Bureau showed that more people were going back to the office in 2022 than in 2021 — yet the great southern migration hasn't slowed.
The Battery Belt is taking shape, and it’s creating a new economic development model where a college degree won’t be the ultimate qualification for jobs.
Surging mortgage rates have brought the housing market down from its giddy highs earlier this year.
The red-hot labor market is cooling. Monthly US job growth has slowed to around 270,000 from more than 500,000 at the start of the year.
There's a new twist in the fast-moving housing market with welcome news for renters: After an 18-month period of red-hot rent growth, the apartment market has turned ice cold over the past few months.
The past three years have shown us the downsides of depending too much on low interest rates, and how a better balance of fiscal and monetary policy can achieve a stronger economy.
