February 2024
VIDEO TRANSCRIPT:
- I’m Danielle Hale, Chief Economist at Realtor.com® and with 2024 underway, here’s what you need to know!
- 2023 data is still rolling in, and while consumers may not have felt great toward the end of the year, the economy continued to chug along. In fact, real economic growth rose in the quarter, and growth in 2023 surpassed 2022.
- Turning to the labor market, revised data improved the original picture we had of late 2023 and January’s job report was a blockbuster as more than 350,000 jobs were added to the economy and unemployment held steady.
- More recent readings show jobless claims on the rise and layoff announcements continue to be high in both the tech and financial sectors, but BLS data on these industries suggest that these adjustments could reflect restructuring rather than downsizing.
- Importantly, hourly earnings edged up 4.5%, meaning that, once again, wages outpaced inflation, creating real spending power growth for workers.
- In its January meeting, the Fed acknowledged that its policy rate is likely at its peak but indicated that it wants to build further confidence that inflation is on a path to the 2% target before it begins cutting rates, noting that data has often exceeded forecasts.
- Since that meeting, the strong jobs report followed by a hotter inflation reading in January affirms the Fed’s approach of waiting for more data. After the inflation reading, investors expect a later start to rate cuts, and many interest rates have ticked higher.
- Mortgage rates had eased from roughly 7.8% to as low as 6.6% in mid-January. However, as 10-year yields tick up, mortgage rates could break out of their range, upending recent stability.
- My advice to home shoppers is to rate-test your budget using a mortgage calculator so that you know how rate changes affect your home shopping budget and plans.
- Turning to housing data, there are some reasons for optimism. Realtor.com’s January Housing Trends Report, compiled by Sabrina Speianu, showed that active listings were above year-ago level for a 3rd straight month, and importantly for home shoppers who are still on the hunt, newly listed homes rose for a third time as well. Despite the increase in homes for sale, asking prices have remained relatively stable, and homes still sell quickly.
- Pricing is stable, but existing home sales have not yet rebounded off of their lows, bringing the 2023 year-end tally to just over 4 million sales, the lowest since 1995.
- December closings reflect home shoppers who contended with near-8% mortgage rates. Pending and new home sales – which are both based on contract signings–each surged 8% in December, suggesting that lower mortgage rates will help boost home sales activity in early 2024.
- January’s hot inflation data was particularly surprising because asking rents have declined for several months in a row according to Realtor.com’s December Rental Trends report, authored by Jiayi Xu. Declines have been minor, but should be enough to bring shelter inflation down, and Realtor.com’s 2024 Housing Forecast anticipates additional steadiness in rents as construction boosts supply.
- Renters looking to make the leap to owning can check out Realtor.com’s Best Markets for First-time Homebuyers report which identifies pockets of opportunity among the 100 largest metro areas that offer a good mix of affordability and amenities.
- In a different take on real estate hot spots, the Emerging Housing Markets Index that my colleague Hannah Jones compiles quarterly in collaboration with the Wall Street Journal revealed a striking number one market this winter – Santa Maria-Santa Barbara California. While other top markets are more expected, affordable areas, this California city exemplifies the other side of the ‘tale of two housing markets’ that are seeing success.
- You’ll find all the details including full reports and our housing data for download at realtor.com/research. You can also follow us on X (formerly twitter) for real time updates.
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