REUTERS
"US labor market stays resilient; housing regresses on higher mortgage rates"
By Lucia Mutikani
April 18, 2024
Summary
* Weekly jobless claims unchanged at 212,000
* Continuing claims rise 2,000 to 1.812 million
* Existing home sales drop 4.3% in March
WASHINGTON, April 18 (Reuters) - The number of Americans filing new claims for unemployment benefits was unchanged at a low level last week, pointing to continued labor market strength that is driving the economy.
Labor market resilience, together with elevated inflation have led financial markets and some economists to expect that the Federal Reserve could delay cutting interest rates until September.
A few economists doubt that the U.S. central bank will lower borrowing costs this year.
"Overall, layoffs remain low," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
"We expect a continuation of the current trend, with a further adjustment in the labor market coming from a moderation in hiring rather than a surge in firings."
Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 212,000 for the week ended April 13, the Labor Department said on Thursday.
Economists polled by Reuters had forecast 215,000 claims in the latest week.
Claims have been bouncing around in a 194,000-225,000 range this year.
Unadjusted claims declined 6,756 to 208,509 last week.
Filings in California jumped by 3,063.
There were also notable increases in claims in Connecticut, Georgia and Oregon.
These were more than offset by a decline of 4,551 in filings in New Jersey.
Claims in the state had surged in the prior week, a move that was blamed on layoffs in the accommodation and food services, transportation and warehousing, and public administration industries.
There were also significant decreases in filings in Minnesota, Ohio, Pennsylvania and Wisconsin.
Fed Chair Jerome Powell backed away on Tuesday from providing any guidance on when rates might be cut, saying instead that monetary policy needed to be restrictive for longer.
Financial markets initially expected the first rate cut to come in March, but the timing got pushed back to June and now to September as data on the labor market and inflation continued to surprise on the upside in the first three months of the year.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
It has raised the benchmark overnight interest rate by 525 basis points since March of 2022.
The claims data covered the period during which the government surveyed businesses and other establishments for the nonfarm payrolls component of April's employment report.
Claims were unchanged between the March and April survey weeks.
The economy added 303,000 jobs in March.
Stocks on Wall Street were trading higher.
The dollar gained versus a basket of currencies.
U.S. Treasury yields rose.
RISING LABOR SUPPLY
The Fed's latest "Beige Book" report on Wednesday described employment as rising at a "slight pace overall" since late February, adding that "several districts reported improved retention of employees, and others pointed to staff reductions at some firms."
It also noted that even as labor supply has improved, "many districts described persistent shortages of qualified applicants for certain positions, including machinists, trades workers and hospitality workers."
Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will offer more clues on the state of the labor market in April.
The so-called continuing claims edged up 2,000 to 1.812 million during the week ending April 6, the claims report showed.
Though still low by historical standards, the slightly elevated level of continuing claims suggests it could be taking longer for some unemployed workers to land new jobs.
With the outlook for rate cuts uncertain, the average rate on the popular 30-year fixed-rate mortgage has drifted above 7%, data from mortgage finance agency Freddie Mac showed, combining with higher house prices to depress home sales.
A separate report from the National Association of Realtors showed existing home sales fell 4.3% in March to a seasonally adjusted annual rate of 4.19 million units.
Home resales, which account for a large portion of U.S. housing sales, declined 3.7% on a year-on-year basis in March.
Sales also continued to be constrained by tight supply, especially in the lower price segment of the market, resulting in multiple offers for properties.
The median existing home price increased 4.8% from a year earlier to $393,500 in March.
That was a record high for the month of March.
Sales of houses in the $100,000-$250,000 price range declined 15.8% year-on-year.
By contrast, sales for houses priced $1 million and above increased 14.0% from a year ago.
The weak sales followed data this week showing housing starts and building permits tumbled in March.
"We're forecasting a very subdued recovery in existing home sales," said Thomas Ryan, property economist at Capital Economics.
"Borrowing costs will fall from where they are now, but not enough to fully offset mortgage rate 'lock-in' effects, which will continue to hold back sales volumes."
While the housing market has regressed, signs of revival in manufacturing are growing.
A third report from the Philadelphia Fed showed its gauge of factory activity in the mid-Atlantic region rising to a two-year high in April amid a jump in new orders.
But businesses reported paying more for inputs, suggesting a pick-up in goods prices could be looming.
Some economists were, however, not too concerned about the rise in the survey's prices paid measure, noting the recent rebound in oil prices amid tensions in the Middle East.
Falling goods prices were the main driver of lower inflation last year.
Data this week showed manufacturing production rebounded in March from a year ago.
"While far from conclusive, this report provides some marginal support in favor of a recovery in the manufacturing sector after its prolonged slump," said Oliver Allen, senior U.S. Economist at Pantheon Macroeconomics.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Paul Simao and Andrea Ricci
https://www.reuters.com/world/us/us-wee ... 024-04-18/
THE HOUSING MARKET
Re: THE HOUSING MARKET
REUTERS
"Mortgage rates top 7% for the first time this year, Freddie Mac says"
By Amina Niasse
April 18, 2024
NEW YORK, April 18 (Reuters) - U.S. mortgage rates increased by the most since June and also crossed the 7% threshold for the first time since December, muddling home sales growth, a Thursday report said.
The average rate on a 30-year fixed-rate mortgage rose to 7.10% for the week ended April 18 from 6.88% the week prior, Freddie Mac reported.
The 22-basis point increase was the largest in about 10 months.
“As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year," said Sam Khater, Freddie Mac's chief economist.
"Last week, purchase applications rose modestly, but it remains unclear how many homebuyers can withstand increasing rates in the future.”
While buyers saw rates on home loans ease during 2023's fourth quarter, they have steadily increased since January, though rates remain below two-decade highs nearing 8% in October.
High mortgage rates last year contributed to limited housing inventory, following the Federal Reserve's rate hike campaign launched in 2022.
Reporting by Amina Niasse; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/mort ... 024-04-18/
"Mortgage rates top 7% for the first time this year, Freddie Mac says"
By Amina Niasse
April 18, 2024
NEW YORK, April 18 (Reuters) - U.S. mortgage rates increased by the most since June and also crossed the 7% threshold for the first time since December, muddling home sales growth, a Thursday report said.
The average rate on a 30-year fixed-rate mortgage rose to 7.10% for the week ended April 18 from 6.88% the week prior, Freddie Mac reported.
The 22-basis point increase was the largest in about 10 months.
“As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year," said Sam Khater, Freddie Mac's chief economist.
"Last week, purchase applications rose modestly, but it remains unclear how many homebuyers can withstand increasing rates in the future.”
While buyers saw rates on home loans ease during 2023's fourth quarter, they have steadily increased since January, though rates remain below two-decade highs nearing 8% in October.
High mortgage rates last year contributed to limited housing inventory, following the Federal Reserve's rate hike campaign launched in 2022.
Reporting by Amina Niasse; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/mort ... 024-04-18/
Re: THE HOUSING MARKET
REUTERS
"US new home sales rebound to six-month high; rising mortgage rates a concern"
By Lucia Mutikani
April 23, 2024
Summary
* New home sales increase 8.8% in March
* Median house price falls 1.9% to $430,700 from year ago
WASHINGTON, April 23 (Reuters) - Sales of new U.S. single-family homes rebounded in March from February's downwardly revised level, drawing support from a persistent shortage of previously owned houses on the market, but momentum could be curbed by a resurgence in mortgage rates.
The report from the Commerce Department on Tuesday also showed the median house price jumped to a seven month-high from February, likely as fewer builders offered price cuts and sales shifted to higher priced homes.
Rising prices and mortgage rates could make housing even more unaffordable, especially for first-time buyers.
"New home sales have remained remarkably strong recently," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.
"That said, the renewed rise in mortgage rates and dip in mortgage applications over the past couple of months means that new home sales will probably tread water at best in the near-term, while existing home sales will fall."
New home sales jumped 8.8% to a seasonally adjusted annual rate of 693,000 units last month, the highest level since September, the Commerce Department's Census Bureau said.
The sales pace for February was revised down to 637,000 units from the previously reported 662,000 units.
Economists polled by Reuters had forecast new home sales, which account for about 14% of U.S. home sales, would advance by a rate of 670,000 units.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales increased 8.3% on a year-on-year basis in March.
Though the new housing market remains underpinned by the dearth of previously owned homes for sale, rising mortgage rates are taking a toll on affordability.
Data last week showed single-family housing starts and building permits declined in March.
Sentiment among single-family homebuilders was unchanged in April, with the National Association of Home Builders noting that "buyers are hesitating until they can better gauge where interest rates are headed."
The average rate on the popular 30-year fixed-rate mortgage has risen back above 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated interest rate cut this year.
A few economists doubt the U.S. central bank will lower borrowing costs in 2024.
BROAD INCREASE
New home sales rose in all four regions last month, with the Northeast posting a 27.8% surge.
Sales in the Midwest gained 5.3% and increased 7.7% in the densely populated South.
They vaulted 8.6% in the West.
Despite the weakness in permits last month, economists believed residential investment picked up in the first quarter after slowing considerably in the October-December period.
The government is scheduled to publish its snapshot of gross domestic product for the first quarter on Thursday.
Growth estimates for the period are as high as a 3.1% annualized rate.
The economy grew at a 3.4% pace in the fourth quarter.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
The median new house price increased 6% to $430,700 from February.
That was the highest level since last August.
Prices, however, slipped 1.9% from a year ago.
Most of the new homes sold last month were in the $300,000-$399,999 price range, followed by the $500,000-$749,000 price bracket.
Builders are constructing smaller and cheaper houses, but fewer of them are cutting prices.
The NAHB survey last week showed the share of builders cutting prices fell to 22% in April from 24% in March and 36% in December.
Fewer builders were also offering incentives to boost sales.
Overall house prices continue to rise because of the supply squeeze in the home resale market.
Data from mortgage finance agency Fannie Mae last week showed house prices increased 7.4% on a year-on-year basis in the first quarter compared to a 6.6% rise in the fourth quarter.
Fannie Mae upgraded its estimate for home price growth this year to 4.8% from 3.2% previously.
There were 477,000 new homes on the market at the end of March, up from 465,000 units in February.
At March's sales pace it would take 8.3 months to clear the supply of houses on the market, down from 8.8 months in February.
Houses under construction accounted for 59.1% of inventory.
Homes yet to be built made up 22.2% of supply, while completed houses accounted for 18.7%.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-n ... 024-04-23/
"US new home sales rebound to six-month high; rising mortgage rates a concern"
By Lucia Mutikani
April 23, 2024
Summary
* New home sales increase 8.8% in March
* Median house price falls 1.9% to $430,700 from year ago
WASHINGTON, April 23 (Reuters) - Sales of new U.S. single-family homes rebounded in March from February's downwardly revised level, drawing support from a persistent shortage of previously owned houses on the market, but momentum could be curbed by a resurgence in mortgage rates.
The report from the Commerce Department on Tuesday also showed the median house price jumped to a seven month-high from February, likely as fewer builders offered price cuts and sales shifted to higher priced homes.
Rising prices and mortgage rates could make housing even more unaffordable, especially for first-time buyers.
"New home sales have remained remarkably strong recently," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.
"That said, the renewed rise in mortgage rates and dip in mortgage applications over the past couple of months means that new home sales will probably tread water at best in the near-term, while existing home sales will fall."
New home sales jumped 8.8% to a seasonally adjusted annual rate of 693,000 units last month, the highest level since September, the Commerce Department's Census Bureau said.
The sales pace for February was revised down to 637,000 units from the previously reported 662,000 units.
Economists polled by Reuters had forecast new home sales, which account for about 14% of U.S. home sales, would advance by a rate of 670,000 units.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales increased 8.3% on a year-on-year basis in March.
Though the new housing market remains underpinned by the dearth of previously owned homes for sale, rising mortgage rates are taking a toll on affordability.
Data last week showed single-family housing starts and building permits declined in March.
Sentiment among single-family homebuilders was unchanged in April, with the National Association of Home Builders noting that "buyers are hesitating until they can better gauge where interest rates are headed."
The average rate on the popular 30-year fixed-rate mortgage has risen back above 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated interest rate cut this year.
A few economists doubt the U.S. central bank will lower borrowing costs in 2024.
BROAD INCREASE
New home sales rose in all four regions last month, with the Northeast posting a 27.8% surge.
Sales in the Midwest gained 5.3% and increased 7.7% in the densely populated South.
They vaulted 8.6% in the West.
Despite the weakness in permits last month, economists believed residential investment picked up in the first quarter after slowing considerably in the October-December period.
The government is scheduled to publish its snapshot of gross domestic product for the first quarter on Thursday.
Growth estimates for the period are as high as a 3.1% annualized rate.
The economy grew at a 3.4% pace in the fourth quarter.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
The median new house price increased 6% to $430,700 from February.
That was the highest level since last August.
Prices, however, slipped 1.9% from a year ago.
Most of the new homes sold last month were in the $300,000-$399,999 price range, followed by the $500,000-$749,000 price bracket.
Builders are constructing smaller and cheaper houses, but fewer of them are cutting prices.
The NAHB survey last week showed the share of builders cutting prices fell to 22% in April from 24% in March and 36% in December.
Fewer builders were also offering incentives to boost sales.
Overall house prices continue to rise because of the supply squeeze in the home resale market.
Data from mortgage finance agency Fannie Mae last week showed house prices increased 7.4% on a year-on-year basis in the first quarter compared to a 6.6% rise in the fourth quarter.
Fannie Mae upgraded its estimate for home price growth this year to 4.8% from 3.2% previously.
There were 477,000 new homes on the market at the end of March, up from 465,000 units in February.
At March's sales pace it would take 8.3 months to clear the supply of houses on the market, down from 8.8 months in February.
Houses under construction accounted for 59.1% of inventory.
Homes yet to be built made up 22.2% of supply, while completed houses accounted for 18.7%.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-n ... 024-04-23/
Re: THE HOUSING MARKET
REUTERS
"US construction spending falls in March"
By Reuters
May 1, 2024
WASHINGTON, May 1(Reuters) - U.S. construction spending unexpectedly fell in March likely as a resurgence in mortgage rates weighed on homebuilding, but activity remains supported by an acute housing shortage.
The Commerce Department's Census Bureau said on Wednesday that construction spending slipped 0.2% after being unchanged in February.
Economists polled by Reuters had forecast construction spending gaining 0.3%.
Construction spending increased 9.6% year-on-year in March.
Spending on private construction projects decreased 0.5% in March after rising 0.2% in February.
Investment in residential construction dropped 0.7% after increasing 0.7% in the prior month.
Outlays on new single-family construction projects fell 0.2%.
Census Department data on Tuesday showed there were 728,000 housing units for sale in the first quarter compared to 665,000 in the first three months of 2023.
Supply is below the 1.145 million units before the COVID-19 pandemic.
Residential investment grew at its fastest pace in more than three years in the first quarter, contributing to the economy's 1.6% annualized expansion pace.
Higher borrowing costs, however, are an obstacle.
The average rate on the popular 30-year fixed-rate mortgage has jumped to a five-month high of 7.17%, latest data from mortgage finance agency Freddie Mac showed.
Outlays on multi-family housing projects dropped 0.6% in March.
Spending on private non-residential structures like factories fell 0.2%.
There were decreases in spending on hotels and motels, churches and power stations.
They more than offset gains in amusement and recreation facilities as well as manufacturing, office space and education facilities.
Spending on structures contracted in the first quarter for the first time in more than a year as the boost from policies by the Biden administration to bring the production of semiconductor manufacturing back to the United States faded.
Investment in public construction projects increased 0.8% after falling 0.4% in February.
State and local government spending rose 0.6% and outlays on federal government projects surged 3.6%.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-c ... 024-05-01/
"US construction spending falls in March"
By Reuters
May 1, 2024
WASHINGTON, May 1(Reuters) - U.S. construction spending unexpectedly fell in March likely as a resurgence in mortgage rates weighed on homebuilding, but activity remains supported by an acute housing shortage.
The Commerce Department's Census Bureau said on Wednesday that construction spending slipped 0.2% after being unchanged in February.
Economists polled by Reuters had forecast construction spending gaining 0.3%.
Construction spending increased 9.6% year-on-year in March.
Spending on private construction projects decreased 0.5% in March after rising 0.2% in February.
Investment in residential construction dropped 0.7% after increasing 0.7% in the prior month.
Outlays on new single-family construction projects fell 0.2%.
Census Department data on Tuesday showed there were 728,000 housing units for sale in the first quarter compared to 665,000 in the first three months of 2023.
Supply is below the 1.145 million units before the COVID-19 pandemic.
Residential investment grew at its fastest pace in more than three years in the first quarter, contributing to the economy's 1.6% annualized expansion pace.
Higher borrowing costs, however, are an obstacle.
The average rate on the popular 30-year fixed-rate mortgage has jumped to a five-month high of 7.17%, latest data from mortgage finance agency Freddie Mac showed.
Outlays on multi-family housing projects dropped 0.6% in March.
Spending on private non-residential structures like factories fell 0.2%.
There were decreases in spending on hotels and motels, churches and power stations.
They more than offset gains in amusement and recreation facilities as well as manufacturing, office space and education facilities.
Spending on structures contracted in the first quarter for the first time in more than a year as the boost from policies by the Biden administration to bring the production of semiconductor manufacturing back to the United States faded.
Investment in public construction projects increased 0.8% after falling 0.4% in February.
State and local government spending rose 0.6% and outlays on federal government projects surged 3.6%.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-c ... 024-05-01/
Re: THE HOUSING MARKET
CNBC
"Renters’ hopes of being able to buy a home have fallen to a record low, New York Fed survey shows"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED MON, MAY 6 2024
KEY POINTS
* The share of renters who believe that they one day will be able to afford a home, fell to a record low 13.4%, according to a New York Federal Reserve survey released Monday.
* There’s not a lot of good news on the renting front, either. Respondents expect rental costs to increase by 9.7% over the next year.
The dream of home ownership has gotten even further away for renters, with higher housing costs and elevated interest rates standing in the way of the American housing dream, according to a New York Federal Reserve survey released Monday.
The share of renters as of February who possess hopes of “residential mobility,” or the belief from renters that they one day will be able to afford a home, fell to a record low 13.4% in the central bank’s annual housing survey for 2024.
That’s down from 15% in 2023 and well off the 20.8% series high back in 2014.
Pessimism about future prospects comes amid a confluence of factors conspiring against the likelihood of renters being able to transition to home ownership.
For one, some 74.2% of renters viewed obtaining a mortgage as somewhat or very difficult, which the New York Fed said has “deteriorated substantially” from the 66.5% level in 2023 and 63.1% in 2022.
Moreover, mortgage rates have remained high by historical standards.
A 30-year fixed-rate mortgage now carries an average 7.22% borrowing rate, the highest since late November 2023, according to Freddie Mac.
Housing affordability has improved little, with the median price in February at $388,700, the highest since November, according to the National Association of Realtors.
The NAR’s housing affordability index was at 103 in February, down slightly from January but still at elevated levels with average monthly housing payments at $2,040.
Survey respondents expect housing prices to increase 5.1% over the next year, nearly double the 2.6% expected rate in February 2023 and above the pre-pandemic mean of 4.2%.
Despite prospects for the Fed to cut interest rates before the end of 2024, respondents think mortgage rates are only going to go higher.
The outlook for a year from now is that borrowing costs will be 8.7%, and 9.7% in three years, both survey records.
There’s not a lot of good news on the renting front, either.
Respondents expect rental costs to increase by 9.7% over the next year, up 1.5 percentage points from last year’s survey and the second highest in series history.
The results come a week after the Federal Open Market Committee voted to hold benchmark interest rates steady while indicating that there has been “a lack of further progress” in its efforts to bring the annual inflation rate back down to 2%.
Futures market pricing is indicating that the Fed will begin lowering rates in September, with a another cut likely to come in December.
https://www.cnbc.com/2024/05/06/renters ... shows.html
"Renters’ hopes of being able to buy a home have fallen to a record low, New York Fed survey shows"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED MON, MAY 6 2024
KEY POINTS
* The share of renters who believe that they one day will be able to afford a home, fell to a record low 13.4%, according to a New York Federal Reserve survey released Monday.
* There’s not a lot of good news on the renting front, either. Respondents expect rental costs to increase by 9.7% over the next year.
The dream of home ownership has gotten even further away for renters, with higher housing costs and elevated interest rates standing in the way of the American housing dream, according to a New York Federal Reserve survey released Monday.
The share of renters as of February who possess hopes of “residential mobility,” or the belief from renters that they one day will be able to afford a home, fell to a record low 13.4% in the central bank’s annual housing survey for 2024.
That’s down from 15% in 2023 and well off the 20.8% series high back in 2014.
Pessimism about future prospects comes amid a confluence of factors conspiring against the likelihood of renters being able to transition to home ownership.
For one, some 74.2% of renters viewed obtaining a mortgage as somewhat or very difficult, which the New York Fed said has “deteriorated substantially” from the 66.5% level in 2023 and 63.1% in 2022.
Moreover, mortgage rates have remained high by historical standards.
A 30-year fixed-rate mortgage now carries an average 7.22% borrowing rate, the highest since late November 2023, according to Freddie Mac.
Housing affordability has improved little, with the median price in February at $388,700, the highest since November, according to the National Association of Realtors.
The NAR’s housing affordability index was at 103 in February, down slightly from January but still at elevated levels with average monthly housing payments at $2,040.
Survey respondents expect housing prices to increase 5.1% over the next year, nearly double the 2.6% expected rate in February 2023 and above the pre-pandemic mean of 4.2%.
Despite prospects for the Fed to cut interest rates before the end of 2024, respondents think mortgage rates are only going to go higher.
The outlook for a year from now is that borrowing costs will be 8.7%, and 9.7% in three years, both survey records.
There’s not a lot of good news on the renting front, either.
Respondents expect rental costs to increase by 9.7% over the next year, up 1.5 percentage points from last year’s survey and the second highest in series history.
The results come a week after the Federal Open Market Committee voted to hold benchmark interest rates steady while indicating that there has been “a lack of further progress” in its efforts to bring the annual inflation rate back down to 2%.
Futures market pricing is indicating that the Fed will begin lowering rates in September, with a another cut likely to come in December.
https://www.cnbc.com/2024/05/06/renters ... shows.html
Re: THE HOUSING MARKET
REUTERS
"NY Fed survey finds Americans bracing for higher housing costs"
By Michael S. Derby
May 6, 2024
May 6 (Reuters) - Americans are once again bracing for another round of higher housing costs, amid rising expectations by renters that they'll never be able to buy a house, the Federal Reserve Bank of New York said on Monday.
As part of its latest Survey of Consumer Expectations, the regional Fed bank found that respondents at the start of the year saw higher near-term increases for both rent and home prices, although they do see some relief over the longer haul for home prices.
Households also see no relief on home borrowing costs and are in fact bracing for the highest levels of mortgage rates in a survey that dates back to 2014.
The New York Fed said that in February respondents predicted home prices would rise 5.1% a year from now, up from the 2.6% they predicted a year ago.
But five years from now, respondents see home prices up by 2.7%, from 2.8% in last year's poll.
On the rental front, respondents reckon costs a year from now will be up 9.7%, the second-highest reading in the survey’s history, from 8.2% in the poll done in February 2023.
Five years from now, survey respondents see rent "essentially flat," the New York Fed said, at 5.1%.
The report found that respondents still have a "strongly positive" outlook on housing as an investment.
They also expect mortgage rates, already high, to go higher.
Respondents predict the average mortgage rate a year from now will be at 8.7% and will be at 9.7% in three years, with both readings at record levels.
As of May 2, home lender Fannie Mae said the average 30-year fixed mortgage stood at 7.22%, well above the sub-3% levels available only a few years ago.
Renters, however, are losing hope of ever owning a home.
The report found a record low of respondents putting good odds of buying a house at some point in the future.
The New York Fed report suggests that the U.S. central bank could face fresh challenges getting inflation back down to its 2% target with the expected cost of housing still rising robustly.
The Fed has been vexed by unexpectedly strong price pressures in the first months of this year, bringing into question whether it will be able to cut interest rates in 2024.
High mortgage rates related to Fed policy have deeply chilled activity in the housing market.
Speaking after a Federal Reserve meeting that held rates steady last week, Fed Chairman Jerome Powell said he still expects price pressures to ease as the year moves forward.
But he also projects housing factors to continue to contribute to price pressures, telling reporters "there are a number of places in the economy where there are just lag structures built into the inflation process and housing is one of them."
Powell flagged the process of setting rental rates as a particular issue, flagging a slow moving process where it takes time for rents to rise in reaction to higher inflation and for those elevated increases to then abate.
The New York Fed report also noted that high mortgage rates now are locking homeowners into houses that currently enjoy the low rates seen during the coronavirus pandemic.
A blog post from the bank noted "close to half of respondents assess their probability of moving in the next three years to be less than 10%," given the cost associated with buying a new house.
Reporting by Michael S. Derby; Editing by Paul Simao and Chizu Nomiyama
https://www.reuters.com/markets/us/ny-f ... 024-05-06/
"NY Fed survey finds Americans bracing for higher housing costs"
By Michael S. Derby
May 6, 2024
May 6 (Reuters) - Americans are once again bracing for another round of higher housing costs, amid rising expectations by renters that they'll never be able to buy a house, the Federal Reserve Bank of New York said on Monday.
As part of its latest Survey of Consumer Expectations, the regional Fed bank found that respondents at the start of the year saw higher near-term increases for both rent and home prices, although they do see some relief over the longer haul for home prices.
Households also see no relief on home borrowing costs and are in fact bracing for the highest levels of mortgage rates in a survey that dates back to 2014.
The New York Fed said that in February respondents predicted home prices would rise 5.1% a year from now, up from the 2.6% they predicted a year ago.
But five years from now, respondents see home prices up by 2.7%, from 2.8% in last year's poll.
On the rental front, respondents reckon costs a year from now will be up 9.7%, the second-highest reading in the survey’s history, from 8.2% in the poll done in February 2023.
Five years from now, survey respondents see rent "essentially flat," the New York Fed said, at 5.1%.
The report found that respondents still have a "strongly positive" outlook on housing as an investment.
They also expect mortgage rates, already high, to go higher.
Respondents predict the average mortgage rate a year from now will be at 8.7% and will be at 9.7% in three years, with both readings at record levels.
As of May 2, home lender Fannie Mae said the average 30-year fixed mortgage stood at 7.22%, well above the sub-3% levels available only a few years ago.
Renters, however, are losing hope of ever owning a home.
The report found a record low of respondents putting good odds of buying a house at some point in the future.
The New York Fed report suggests that the U.S. central bank could face fresh challenges getting inflation back down to its 2% target with the expected cost of housing still rising robustly.
The Fed has been vexed by unexpectedly strong price pressures in the first months of this year, bringing into question whether it will be able to cut interest rates in 2024.
High mortgage rates related to Fed policy have deeply chilled activity in the housing market.
Speaking after a Federal Reserve meeting that held rates steady last week, Fed Chairman Jerome Powell said he still expects price pressures to ease as the year moves forward.
But he also projects housing factors to continue to contribute to price pressures, telling reporters "there are a number of places in the economy where there are just lag structures built into the inflation process and housing is one of them."
Powell flagged the process of setting rental rates as a particular issue, flagging a slow moving process where it takes time for rents to rise in reaction to higher inflation and for those elevated increases to then abate.
The New York Fed report also noted that high mortgage rates now are locking homeowners into houses that currently enjoy the low rates seen during the coronavirus pandemic.
A blog post from the bank noted "close to half of respondents assess their probability of moving in the next three years to be less than 10%," given the cost associated with buying a new house.
Reporting by Michael S. Derby; Editing by Paul Simao and Chizu Nomiyama
https://www.reuters.com/markets/us/ny-f ... 024-05-06/
Re: THE HOUSING MARKET
REUTERS
"US 30-year fixed-rate mortgage falls to 7.09%, still too high to boost housing"
By Reuters
May 9, 2024
WASHINGTON, May 9 (Reuters) - U.S. mortgage rates fell this week for the first time in more than a month amid signs of slowing economic activity, but remain too high to provide a significant boost to the housing market.
The average rate on the popular 30-year fixed-rate mortgage was down to 7.09% as of May 9, from 7.22% last week, ending five straight weekly increases, mortgage finance agency Freddie Mac said in a statement on Thursday.
It averaged 6.35% during the same period a year ago.
The average rate on the 15-year fixed-rate mortgage fell to 6.38% from 6.47% last week.
That compared to an average of 5.75% a year ago.
The decline in mortgage rates coincides with a drop in the 10-year Treasury yield following recent data showing a moderation economic and job growth.
"An environment where rates continue to hover above seven percent impacts both sellers and buyers," said Sam Khater, Freddie Mac's chief economist.
"Many potential sellers remain hesitant to list their home and part with lower mortgage rates from years prior, adversely impacting supply and keeping house prices elevated."
"These elevated house prices add to the overall affordability challenges that potential buyers face in this high-rate environment."
Reporting by Lucia Mutikani; Editing by Paul Simao
https://www.reuters.com/markets/us/us-3 ... 024-05-09/
"US 30-year fixed-rate mortgage falls to 7.09%, still too high to boost housing"
By Reuters
May 9, 2024
WASHINGTON, May 9 (Reuters) - U.S. mortgage rates fell this week for the first time in more than a month amid signs of slowing economic activity, but remain too high to provide a significant boost to the housing market.
The average rate on the popular 30-year fixed-rate mortgage was down to 7.09% as of May 9, from 7.22% last week, ending five straight weekly increases, mortgage finance agency Freddie Mac said in a statement on Thursday.
It averaged 6.35% during the same period a year ago.
The average rate on the 15-year fixed-rate mortgage fell to 6.38% from 6.47% last week.
That compared to an average of 5.75% a year ago.
The decline in mortgage rates coincides with a drop in the 10-year Treasury yield following recent data showing a moderation economic and job growth.
"An environment where rates continue to hover above seven percent impacts both sellers and buyers," said Sam Khater, Freddie Mac's chief economist.
"Many potential sellers remain hesitant to list their home and part with lower mortgage rates from years prior, adversely impacting supply and keeping house prices elevated."
"These elevated house prices add to the overall affordability challenges that potential buyers face in this high-rate environment."
Reporting by Lucia Mutikani; Editing by Paul Simao
https://www.reuters.com/markets/us/us-3 ... 024-05-09/
Re: THE HOUSING MARKET
REUTERS
"U.S. homebuilder sentiment tumbles as rates slow buyer traffic"
By Reuters
May 15, 2024
May 15 (Reuters) - U.S. homebuilder sentiment soured in May for the first time in six months as high interest rates on home loans kept potential customers on the sidelines and more builders had to offer incentives to lure buyers, data out Wednesday showed.
The National Association of Home Builders/Wells Fargo Housing Market Index fell unexpectedly to 45 in May, the lowest since January, from 51 a month earlier.
The reading was lower than all 30 estimates in a poll of economists by Reuters, which had a median expectation for 51.
NAHB measures of current sales, sales expectations for the next six months and traffic of potential buyers all fell.
According to the Mortgage Bankers Association, interest rates on a 30-year fixed rate mortgage have held above 7% since early April.
“A lack of progress on reducing inflation pushed long-term interest rates higher in the first quarter and this is acting as a drag on builder sentiment,” said NAHB Chief Economist Robert Dietz.
“The last leg in the inflation fight is to reduce shelter inflation, and this can only occur if builders are able to construct more attainable, affordable housing.”
Data earlier on Wednesday from the Labor Department showed annual shelter inflation rates at their lowest in about two years.
A quarter of builders reported cutting prices to help sales in May, snapping four months of declines, and the use of some form of buyer incentives rose to 59% from 57% in April.
The average price cut was 6%.
Reporting By Dan Burns; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-h ... 024-05-15/
"U.S. homebuilder sentiment tumbles as rates slow buyer traffic"
By Reuters
May 15, 2024
May 15 (Reuters) - U.S. homebuilder sentiment soured in May for the first time in six months as high interest rates on home loans kept potential customers on the sidelines and more builders had to offer incentives to lure buyers, data out Wednesday showed.
The National Association of Home Builders/Wells Fargo Housing Market Index fell unexpectedly to 45 in May, the lowest since January, from 51 a month earlier.
The reading was lower than all 30 estimates in a poll of economists by Reuters, which had a median expectation for 51.
NAHB measures of current sales, sales expectations for the next six months and traffic of potential buyers all fell.
According to the Mortgage Bankers Association, interest rates on a 30-year fixed rate mortgage have held above 7% since early April.
“A lack of progress on reducing inflation pushed long-term interest rates higher in the first quarter and this is acting as a drag on builder sentiment,” said NAHB Chief Economist Robert Dietz.
“The last leg in the inflation fight is to reduce shelter inflation, and this can only occur if builders are able to construct more attainable, affordable housing.”
Data earlier on Wednesday from the Labor Department showed annual shelter inflation rates at their lowest in about two years.
A quarter of builders reported cutting prices to help sales in May, snapping four months of declines, and the use of some form of buyer incentives rose to 59% from 57% in April.
The average price cut was 6%.
Reporting By Dan Burns; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-h ... 024-05-15/