We’re getting a lot of housing market data this week. Yesterday, we learned that housing construction Has risen In November. Today we learned that the number of existing homes sold in November also rose.
But the big question about the housing market is whether these strong numbers will hold up during the crisis Next year. So we decided to step into the Marketplace time machine and report back on that time the next year to see how the housing market is shaping up.
Well, it’s December 2024. Taylor Swift is still the most popular music artist in the country. People are still very excited about artificial intelligence. And housing building The pipeline is working fine.
“Single-family construction is definitely improving,” said Charlie Dougherty, an economist at Wells Fargo Bank.
Now, this might sound a little depressing. That’s because homebuilders are still dealing with many of the same issues they were facing in 2023.
“You know, the supply side for homebuilders is still constrained, right? Lots are still hard to find, labor is still expensive, and building materials are still hard to come by,” Dougherty said.
As a result house prices Growth in 2024 was growing at a modest pace, said Odita Koshy, deputy chief economist at First American.
“So, the situation was not quite as hot, as it was during the pandemic, with home prices growing in double digits, but still positive, due to the ongoing supply-and-demand imbalance in the housing market,” Koshy said.
One of the reasons why supply and demand remain imbalanced is because of increased demand. This is because in 2024 mortgages become less expensive.
“They started the year near 7%. Now we’re closer to 6%,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association.
He says the Fed has already cut interest rates several times. That’s after the economy went through a brief recession, he says, and inflation continued to fall.
But from the perspective of 2023, Fratantoni says the economic outlook is not so dire.
“We expect consumer spending to strengthen throughout 2024, and we certainly expect the pace of home sales to pick up as the year goes on,” Fratantoni said.
Fratantoni says housing was the first sector to suffer a recession when the Fed started raising interest rates. This means they will be the first to recover when the Fed starts cutting them.
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