In this episode, ABoR CMO Kelea Youngblood and Dr. Clare Losey discuss the Federal Reserve's decision to not raise the federal funds rate, which is currently between 5.25% and 5.5%. Dr. Losey notes that the market responded positively to this news, which was also reflected in the declining ten-year Treasury yield. The implication is that mortgage rates might not rise significantly and may have already peaked, with a slight decline from 7.79% to 7.76% observed recently.

In this episode of Driving It Home, ABoR Deputy Director of Communications Danielle Hammett and Dr. Clare Losey discuss the Federal Reserve's decision on interest rates, with the anticipation that rates will hold steady and a prediction that mortgage rates will remain elevated throughout 2024.

In this episode, ABoR CMO Kelea Youngblood and Dr. Clare Losey dive into recent market statistics. They highlight that closed sales have surged by almost 20%, and leases have seen a 10% increase. Even with the present higher mortgage rates, hovering in the low 7% range, the real estate market demonstrates remarkable resilience. The data, when compared year-over-year, suggests steady sales and pricing trends, despite the uptick in mortgage rates. To navigate the elevated rates, buyers are potentially exploring innovative financial strategies, including down payment assistance programs. It is anticipated that these high rates will remain, with potential easing anticipated in the early months of 2024.

In this episode, Emily and Dr. Losey dive into the economy's current status, particularly the inflation rates and their repercussions on the housing market. Although inflation rates have moderated since their June 2022 peak, September's Consumer Price Index (CPI) still recorded a 3.7% year-over-year increase, a situation that complicates the Federal Reserve's decision on interest rates. Amid factors like a robust labor market and geopolitical concerns, predictions now suggest the Federal Reserve may not hike rates in the forthcoming November and December meetings.

Last week beckoned a slew of jobs data, from job openings on Tuesday to the job report on Friday. After falling for three consecutive months, job openings rose in August to 9.6 million, measuring well above consensus expectations of 8.8 million. Meanwhile, employers added 336,000 jobs in September, nearly double consensus expectations. September’s figure also represents a sharp uptick from August’s upwardly revised 227,000 gain and the strongest gain since January. The unemployment rate was unchanged at 3.8%. Wage increases were somewhat softer than expected, with average hourly earnings rising 4.2% YoY and 0.2% MoM, compared to consensus expectations of 4.3% YoY and 0.3% MoM.

Job growth slowed in the Austin-Round Rock-Georgetown MSA in August. Total nonfarm employment grew 2.4% YoY in the Austin MSA relative to 2.8% in Texas and 2% in the United States. Sluggish growth in both the Information (0.2% YoY) and Financial Activities (0.1% YoY) sectors weighed on job growth in the Austin MSA. Both sectors continue to face turbulence from broader macroeconomic headwinds, including higher interest rates and greater financial uncertainty related to rate hikes. Meanwhile, the unemployment rate in the Austin MSA (3.6%) measured below that of both Texas (4.1%) and the United States (3.8%). 

In its September meeting, the Federal Reserve opted to pause rate hikes, but signaled that it will likely raise rates by 25 basis points in either its November or December meeting. Moreover, the Fed indicated that the fed funds rate will likely remain higher for longer - news which continues to be digested by financial markets. (On Wednesday, the day the rate decision was announced, the S&P 500 was down 1% and the yield on 2-year Treasuries, which reflect interest rate expectations, rose to 17-year highs.

The August housing stats (linked below) depicted a modest uptick in closed sales (+1% YoY) and a less considerable decline in the median sales price (-7% YoY) than in months prior. Active listings ticked up 12% YoY, while months of inventory increased to 3.8 months, indicative of greater supply in the market. Sales of lower-priced homes increased YoY, while sales of mid and higher-priced homes declined YoY. The effects of the rise in mortgage rates (the average for August measured 7.07%) have yet to fully materialize in the housing market. 

This week will prove a particularly significant one for the housing market. On Wednesday, August inflation data (i.e., the CPI) will be released. Headline inflation may measure higher on a YoY basis than the readings for the past several months due to the rise in oil prices. Last week, the 10-year Treasury yield, an important determinant of the direction of mortgage rates, remained elevated amid investors' expectations that the Fed will raise rates later this year. (The market anticipates the Fed will hold rates steady in its September meeting.) The reaction of the 10-year Treasury yield to the inflation reading will play a key role in determining the direction of mortgage rates over the near-term.

Dive into the NEW "Truth in Austin's Missing Housing" report and explore the severe undersupply of housing in Austin and actionable policy recommendations aimed to help bridge the gap between residents and missing housing. https://www.abor.com/thetruth