As we move through September 2024, the real estate market continues to experience significant shifts, driven by changes in interest rates and a ramp-up in home construction. Here’s what you need to know about the latest developments:
The Fed’s Aggressive Rate Cut
The Federal Reserve has kicked off its rate-cutting cycle by lowering the Federal Funds Rate by 50 basis points, bringing it to a range of 4.75% to 5%. This move, though not unanimously supported, signals the Fed’s efforts to prevent a potential recession. While mortgage rates don’t always move directly with the Fed’s rate decisions, a general decrease in interest rates is often a positive sign for homebuyers.
Existing Home Sales Decline, But Demand Remains
According to the National Association of REALTORS® (NAR), August saw a 2.5% decline in existing home sales compared to July. However, despite the drop in sales, demand remains strong, with homes staying on the market for an average of just 26 days and nearly a quarter selling above list price. As mortgage rates continue to fall, we expect renewed buyer activity in the coming months.
Builder Confidence Rises
After several months of decline, home builder confidence is rebounding. The National Association of Home Builders (NAHB) reported a two-point increase in their Housing Market Index for September, signaling optimism for future sales. As mortgage rates drop, builders are regaining confidence in the market, which could mean more new homes available soon.
Single-Family Home Construction Surges
In August, housing starts jumped 9.6%, led by a significant 15.8% rise in single-family home construction. Building permits also increased, showing that builders are preparing for more future projects. This surge in new construction is a positive sign for buyers seeking more housing options in a tight market.
Retail Sales and Job Market Insights
Retail sales surprised economists with a 0.1% gain in August, showcasing resilient consumer spending. However, the job market shows signs of slowing, with continuing jobless claims topping 1.8 million for 15 consecutive weeks. Despite these mixed signals, the overall economic picture remains stable.
Looking Ahead: What to Expect
This week, keep an eye out for important housing data, including home appreciation figures from Case-Shiller and the Federal Housing Finance Agency. New and pending home sales reports will also provide more insights into the current state of the market. Additionally, the Fed’s favored inflation measure, Personal Consumption Expenditures, will be released on Friday, giving us a clearer view of the inflation landscape.
At Corken + Company, we are committed to keeping you informed about key market trends and how they may impact your home buying or selling journey. Whether you’re looking to make a move or simply stay up to date on the latest market developments, our team is here to guide you every step of the way.
