REUTERS
"U.S. factory output solid in September; builder sentiment slumps further"
By Dan Burns
October 18, 2022
Oct 18 (Reuters) - Production at U.S. factories rose in September led by output gains in both durable and nondurable goods, indicating the manufacturing sector remains on reasonable footing despite the Federal Reserve's efforts to hamper demand - and lower inflation - through higher interest rates.
But the Fed's aggressive rate hike campaign has delivered another blow to the housing sector, with market sentiment among U.S. home builders sliding for the 10th month in a row in October as soaring mortgage rates and bottlenecks for building materials put new home purchases out of reach for many American consumers, prospective first-time buyers in particular.
The two data points out Tuesday illustrate the uneven impact the U.S. central bank's rate hikes are having so far on the economy.
Housing has emerged as the most-afflicted sector so far, with interest rates on the most popular type of U.S. home loan nearing 7% - the highest since 2006 - while sales of new and existing homes have tumbled by roughly 25% since January.
But there's been little consistent hard data so far showing demand elsewhere in U.S. economy is falling to the degree needed to bring inflation materially lower from its four-decade-high peaks reached over the summer.
"Limited slack and continued strong demand will lead to higher prices," economists at Jefferies wrote.
"The Fed cannot be happy about this as it shows they are further behind the curve than they thought and none of their moves to tighten policy this year have resulted in demonstrable progress toward getting inflation back down to target."
Manufacturing output rose 0.4% last month, keeping pace with an upwardly revised 0.4% gain in August, the Federal Reserve said on Tuesday.
Economists polled by Reuters had forecast factory production would rise 0.2%.
Output increased 4.7% from a year earlier.
Overall industrial production rose 0.4%, after slipping 0.1% the prior month.
Economists polled by Reuters had estimated a 0.1% increase.
Capacity utilization, a measure of how fully producers are using their resources, rose to 80.3% last month from an upwardly revised 80.1% in August.
The figures continued the recent pattern of "hard data," such as government reports on factory orders and industrial production, running stronger than the "soft data," such as purchasing manager surveys.
Motor vehicle and parts production, which has experienced notable volatility because of a global shortage of the semiconductors used for vehicle operating systems, rose 1% after falling 1.5% in August and rising 3.6% in July.
"Autos have often been the swing factor for manufacturing since the beginning of the pandemic due to semiconductor shortages," Jefferies economists Thomas Simons and Aneta Markowska said.
"However, the strength this month is significantly more broadly-based than usual."
HOUSING HIT
Since March, the U.S. central bank has lifted its benchmark policy rate from near zero to a range of 3.00%-3.25%, and the fed funds rate is now expected to end the year in the mid-4% range with inflation yet to show signs of abating materially.
The rate hikes have torpedoed activity in the housing sector, and Wednesday's data from the National Association of Home Builders reinforced that.
The NAHB/Wells Fargo Housing Market index dropped eight points to 38 this month.
With the exception of the short-lived plunge during the spring of 2020 when the country locked down during the first wave of COVID-19, this was the lowest reading since August 2012.
A reading above 50 indicates that more builders view conditions as good rather than poor.
Economists polled by Reuters had forecast the index at 43.
The government on Wednesday will publish the September figures for the number of new homes starting construction and volumes of permits being issued for new home building projects, both of which have declined sharply this year.
Both are estimated to have fallen further last month.
"This will be the first year since 2011 to see a decline for single-family starts," NAHB Chief Economist Robert Dietz said in a statement.
"And given expectations for ongoing elevated interest rates due to actions by the Federal Reserve, 2023 is forecasted to see additional single-family building declines as the housing contraction continues."
"While some analysts have suggested that the housing market is now more 'balanced,' the truth is that the homeownership rate will decline in the quarters ahead as higher interest rates and ongoing elevated construction costs continue to price out a large number of prospective buyers," Dietz said.
The survey's measure of current sales conditions dropped nine points to 45.
Its gauge of sales expectations over the next six months slumped 11 points to 35.
The component measuring traffic of prospective buyers fell six points to 25.
Reporting By Dan Burns; Editing by Nick Zieminski
https://www.reuters.com/markets/us/us-f ... 022-10-18/
THE HOUSING MARKET
Re: THE HOUSING MARKET
REUTERS
"U.S. single-family home starts fall to lowest level in more than two years"
By Reuters Staff
OCTOBER 19, 2022
(Reuters) -U.S. homebuilding fell more than expected in September and the number of new groundbreakings for single-family homes tumbled to the lowest level in more than two years, according to Census Bureau data out Wednesday that showed the ongoing impact of the Federal Reserve’s interest rate hikes on the housing market.
Housing starts dropped 8.1% to a seasonally adjusted annual rate of 1.439 million units last month.
Data for August was revised down to a rate of 1.566 million units from the previously reported 1.575 million units.
Economists polled by Reuters had forecast starts would come in at a rate of 1.475 million units.
New single-family home projects fell 4.7% to an annual rate of 892,000, the lowest level since May 2020, and are unlikely to see a rebound soon with mortgage rates at a 20-year high and material bottlenecks still dogging builders.
Permits issued for new single-family houses fell 3.1% from August to an annual rate of 872,000, the lowest level since June 2020.
“We expect starts to moderate further in (the fourth quarter) to ... 1.420 million from 1.461 million” in the third quarter, Nancy Vanden Houten, lead U.S. economist at Oxford Economics, wrote.
“The risk, however, is for a slower pace of starts, given the weak handoff at the end of Q3 and pessimism among homebuilders who are seeing buyers retreat to the sidelines at a time when they continue to face elevated cost pressures.”
RISING RATES
The Fed’s aggressive monetary policy tightening has significantly weakened the housing market, with most indicators falling to levels last seen during the first wave of the COVID-19 pandemic in the spring of 2020.
In contrast, other sectors of the economy, like the labor market, have shown resilience despite the U.S. central bank’s attempts to cool demand.
Since March, the Fed has lifted its benchmark policy rate from near zero to a range of 3.00%-3.25%, and the fed funds rate is now expected to end the year in the mid-4% range with inflation yet to show signs of abating materially.
Mortgage rates have risen even higher.
The 30-year fixed mortgage rate averaged 6.94% last week, the highest since 2002, up from 6.81% a week earlier, according to the Mortgage Bankers Association.
Multi-unit project starts took a step back in September, dropping 13.1% on the month but that followed a gain of more than 30% in the month before, and they remain well above the pre-pandemic trend.
Steep home prices have kept more potential buyers out of the market and lifted demand for rental units, and builders have started more apartment projects this year, with starts of projects for five or more units up 16.5% from a year earlier.
“While single-unit starts have collapsed under the weight of higher mortgage rates, rental demand continues to be very strong,” economists at Jefferies wrote.
“Double-digit rent increases create a strong incentive to build more multi-family units, even as financing costs have risen.”
Permits for future home construction rose 1.4% to a rate of 1.564 million units in September, but the gain was all in multi-unit projects.
Residential fixed investment declined at its steepest pace in two years in the second quarter, contributing to the second straight quarterly drop in gross domestic product during that period.
Homebuilding is likely to remain on the back foot for the rest of the year.
A survey on Tuesday showed the National Association of Home Builders/Wells Fargo Housing Market sentiment index fell for the 10th straight month in October.
Reporting by Dan Burns; Editing by Paul Simao
https://www.reuters.com/article/usa-eco ... SL1N31K15W
"U.S. single-family home starts fall to lowest level in more than two years"
By Reuters Staff
OCTOBER 19, 2022
(Reuters) -U.S. homebuilding fell more than expected in September and the number of new groundbreakings for single-family homes tumbled to the lowest level in more than two years, according to Census Bureau data out Wednesday that showed the ongoing impact of the Federal Reserve’s interest rate hikes on the housing market.
Housing starts dropped 8.1% to a seasonally adjusted annual rate of 1.439 million units last month.
Data for August was revised down to a rate of 1.566 million units from the previously reported 1.575 million units.
Economists polled by Reuters had forecast starts would come in at a rate of 1.475 million units.
New single-family home projects fell 4.7% to an annual rate of 892,000, the lowest level since May 2020, and are unlikely to see a rebound soon with mortgage rates at a 20-year high and material bottlenecks still dogging builders.
Permits issued for new single-family houses fell 3.1% from August to an annual rate of 872,000, the lowest level since June 2020.
“We expect starts to moderate further in (the fourth quarter) to ... 1.420 million from 1.461 million” in the third quarter, Nancy Vanden Houten, lead U.S. economist at Oxford Economics, wrote.
“The risk, however, is for a slower pace of starts, given the weak handoff at the end of Q3 and pessimism among homebuilders who are seeing buyers retreat to the sidelines at a time when they continue to face elevated cost pressures.”
RISING RATES
The Fed’s aggressive monetary policy tightening has significantly weakened the housing market, with most indicators falling to levels last seen during the first wave of the COVID-19 pandemic in the spring of 2020.
In contrast, other sectors of the economy, like the labor market, have shown resilience despite the U.S. central bank’s attempts to cool demand.
Since March, the Fed has lifted its benchmark policy rate from near zero to a range of 3.00%-3.25%, and the fed funds rate is now expected to end the year in the mid-4% range with inflation yet to show signs of abating materially.
Mortgage rates have risen even higher.
The 30-year fixed mortgage rate averaged 6.94% last week, the highest since 2002, up from 6.81% a week earlier, according to the Mortgage Bankers Association.
Multi-unit project starts took a step back in September, dropping 13.1% on the month but that followed a gain of more than 30% in the month before, and they remain well above the pre-pandemic trend.
Steep home prices have kept more potential buyers out of the market and lifted demand for rental units, and builders have started more apartment projects this year, with starts of projects for five or more units up 16.5% from a year earlier.
“While single-unit starts have collapsed under the weight of higher mortgage rates, rental demand continues to be very strong,” economists at Jefferies wrote.
“Double-digit rent increases create a strong incentive to build more multi-family units, even as financing costs have risen.”
Permits for future home construction rose 1.4% to a rate of 1.564 million units in September, but the gain was all in multi-unit projects.
Residential fixed investment declined at its steepest pace in two years in the second quarter, contributing to the second straight quarterly drop in gross domestic product during that period.
Homebuilding is likely to remain on the back foot for the rest of the year.
A survey on Tuesday showed the National Association of Home Builders/Wells Fargo Housing Market sentiment index fell for the 10th straight month in October.
Reporting by Dan Burns; Editing by Paul Simao
https://www.reuters.com/article/usa-eco ... SL1N31K15W
Re: THE HOUSING MARKET
REUTERS
"U.S. existing home sales slide again in September; jobless claims fall"
By Dan Burns
October 20, 2022
Oct 20 (Reuters) - Sales of existing U.S. homes slid for an eighth straight month in September and will likely fall further in the months ahead as the housing market continues to stand out as the economic sector absorbing the hardest hit from the Federal Reserve's aggressive interest rate hikes.
The broadly weak report from the National Association of Realtors on Thursday stood in contrast with another strong reading of the U.S. job market, with the Labor Department reporting an unexpected drop last week in the number of people seeking unemployment benefits for the first time.
The two reports illustrate the uneven impact seen so far from the swiftest series of Fed rate hikes in at least four decades.
The rate-sensitive housing market, which rocketed during the pandemic on then-low borrowing costs and demand for more living space during COVID-19 restrictions, has been broadsided by the increases as rates on the most popular form of home loan soar to near 7% - the highest in 20 years.
But other areas of activity, from the job market to consumer spending, have shown little effect so far, indicating the Fed still may have work to do to lower the overall demand that is keeping price pressures elevated.
The U.S. central bank has raised its benchmark overnight interest rate from near zero in March to the current range of 3.00% to 3.25%, and that rate is likely to end the year in the mid-4% range, based on Fed officials' own projections and recent comments.
SELLERS' MARKET NO MORE
Existing home sales fell 1.5% to a seasonally adjusted annual rate of 4.71 million units last month, the NAR said.
Outside of the short-lived plunge during the spring of 2020, when the economy was reeling from the first wave of COVID-19, this was the lowest sales level since September 2012.
Economists polled by Reuters had forecast sales would decrease to a rate of 4.70 million units.
On a regional basis, sales fell in the Northeast, Midwest and South and were unchanged in the West.
Home resales, which account for the bulk of U.S. home sales, decreased 23.8% on a year-on-year basis.
Data this week showed confidence among homebuilders eroding for the 10th straight month in October, and ground-breaking for new single-family home projects tumbled to the lowest level in more than two years in September.
Mortgage rates, which move in tandem with U.S. Treasury yields, have soared even higher.
The 30-year fixed mortgage rate averaged 6.94% in the latest week, the highest in 20 years, up from 6.92% in the prior week, according to data from mortgage finance agency Freddie Mac.
NAR Chief Economist Lawrence Yun said the September sales numbers don't reflect the latest surge in mortgage rates, which have climbed roughly a percentage point in a month.
As a result, he expects the sales rate to decline further in the months ahead, perhaps to as low as 4.5 million annually, which would be roughly 4% to 5% lower than the current sales pace.
Though house price growth has slowed as demand weakened, tight supply is keeping prices elevated.
The median existing house price increased 8.4% from a year earlier to $384,800 in September.
There were 1.25 million previously owned homes on the market, down 0.8% from a year ago.
"The details of the report suggest that housing is no longer a sellers' market," Aneta Markowska, chief financial economist at Jefferies, wrote.
"Until this summer, home prices continued to rise despite declining demand; likely because supply was also muted."
"However, the balance of power is finally shifting from sellers to buyers."
LABOR MARKET STILL STRONG
Meanwhile, few indications have surfaced so far that the labor market is loosening significantly or that employers are shifting into job-cutting mode.
Initial claims for state unemployment benefits fell unexpectedly by 12,000 to a seasonally adjusted 214,000 for the week ended Oct. 15, the Labor Department said.
Data for the prior week was revised to show 2,000 fewer applications filed than previously reported.
Economists polled by Reuters had forecast 230,000 applications for the latest week.
The government reported earlier this month that job openings dropped by 1.1 million, the largest decline since April 2020, to 10.1 million on the last day of August.
But economists do not expect widespread layoffs, saying companies were wary of releasing their workers after difficulties hiring in the past year as the pandemic forced some people out of the workforce, partly due to prolonged illness caused by the virus.
The claims report showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 21,000 to 1.385 million in the week ending Oct. 8.
So-called continuing claims have not strayed materially from that level for roughly six months and remain 400,000-500,000 below the level that prevailed before the pandemic.
"Even as the economy slows, employers appear to be reluctant to lay off workers that they have struggled to hire and retain," Nancy Vanden Houten, lead U.S. economist at Oxford Economics, wrote in a note to clients.
"We don't look for claims to fall much below current levels, but we don't look for a significant rise in claims or unemployment either until we enter a recession in 2023."
Reporting by Dan Burns; Editing by Paul Simao
https://www.reuters.com/markets/us/us-e ... 022-10-20/
"U.S. existing home sales slide again in September; jobless claims fall"
By Dan Burns
October 20, 2022
Oct 20 (Reuters) - Sales of existing U.S. homes slid for an eighth straight month in September and will likely fall further in the months ahead as the housing market continues to stand out as the economic sector absorbing the hardest hit from the Federal Reserve's aggressive interest rate hikes.
The broadly weak report from the National Association of Realtors on Thursday stood in contrast with another strong reading of the U.S. job market, with the Labor Department reporting an unexpected drop last week in the number of people seeking unemployment benefits for the first time.
The two reports illustrate the uneven impact seen so far from the swiftest series of Fed rate hikes in at least four decades.
The rate-sensitive housing market, which rocketed during the pandemic on then-low borrowing costs and demand for more living space during COVID-19 restrictions, has been broadsided by the increases as rates on the most popular form of home loan soar to near 7% - the highest in 20 years.
But other areas of activity, from the job market to consumer spending, have shown little effect so far, indicating the Fed still may have work to do to lower the overall demand that is keeping price pressures elevated.
The U.S. central bank has raised its benchmark overnight interest rate from near zero in March to the current range of 3.00% to 3.25%, and that rate is likely to end the year in the mid-4% range, based on Fed officials' own projections and recent comments.
SELLERS' MARKET NO MORE
Existing home sales fell 1.5% to a seasonally adjusted annual rate of 4.71 million units last month, the NAR said.
Outside of the short-lived plunge during the spring of 2020, when the economy was reeling from the first wave of COVID-19, this was the lowest sales level since September 2012.
Economists polled by Reuters had forecast sales would decrease to a rate of 4.70 million units.
On a regional basis, sales fell in the Northeast, Midwest and South and were unchanged in the West.
Home resales, which account for the bulk of U.S. home sales, decreased 23.8% on a year-on-year basis.
Data this week showed confidence among homebuilders eroding for the 10th straight month in October, and ground-breaking for new single-family home projects tumbled to the lowest level in more than two years in September.
Mortgage rates, which move in tandem with U.S. Treasury yields, have soared even higher.
The 30-year fixed mortgage rate averaged 6.94% in the latest week, the highest in 20 years, up from 6.92% in the prior week, according to data from mortgage finance agency Freddie Mac.
NAR Chief Economist Lawrence Yun said the September sales numbers don't reflect the latest surge in mortgage rates, which have climbed roughly a percentage point in a month.
As a result, he expects the sales rate to decline further in the months ahead, perhaps to as low as 4.5 million annually, which would be roughly 4% to 5% lower than the current sales pace.
Though house price growth has slowed as demand weakened, tight supply is keeping prices elevated.
The median existing house price increased 8.4% from a year earlier to $384,800 in September.
There were 1.25 million previously owned homes on the market, down 0.8% from a year ago.
"The details of the report suggest that housing is no longer a sellers' market," Aneta Markowska, chief financial economist at Jefferies, wrote.
"Until this summer, home prices continued to rise despite declining demand; likely because supply was also muted."
"However, the balance of power is finally shifting from sellers to buyers."
LABOR MARKET STILL STRONG
Meanwhile, few indications have surfaced so far that the labor market is loosening significantly or that employers are shifting into job-cutting mode.
Initial claims for state unemployment benefits fell unexpectedly by 12,000 to a seasonally adjusted 214,000 for the week ended Oct. 15, the Labor Department said.
Data for the prior week was revised to show 2,000 fewer applications filed than previously reported.
Economists polled by Reuters had forecast 230,000 applications for the latest week.
The government reported earlier this month that job openings dropped by 1.1 million, the largest decline since April 2020, to 10.1 million on the last day of August.
But economists do not expect widespread layoffs, saying companies were wary of releasing their workers after difficulties hiring in the past year as the pandemic forced some people out of the workforce, partly due to prolonged illness caused by the virus.
The claims report showed the number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 21,000 to 1.385 million in the week ending Oct. 8.
So-called continuing claims have not strayed materially from that level for roughly six months and remain 400,000-500,000 below the level that prevailed before the pandemic.
"Even as the economy slows, employers appear to be reluctant to lay off workers that they have struggled to hire and retain," Nancy Vanden Houten, lead U.S. economist at Oxford Economics, wrote in a note to clients.
"We don't look for claims to fall much below current levels, but we don't look for a significant rise in claims or unemployment either until we enter a recession in 2023."
Reporting by Dan Burns; Editing by Paul Simao
https://www.reuters.com/markets/us/us-e ... 022-10-20/
Re: THE HOUSING MARKET
REUTERS
"Inflation worries hurt U.S. consumer confidence; house prices decelerating"
By Lucia Mutikani
OCTOBER 25, 2022
WASHINGTON (Reuters) - U.S. consumer confidence ebbed in October after two straight monthly increases amid rising concerns about inflation and a possible recession next year, but households remained keen to purchase big-ticket items like motor vehicles and appliances.
The Conference Board survey on Tuesday also showed more consumers planned to buy a home over the next six months, despite soaring borrowing costs.
The steady rise in consumers’ buying intentions could provide some stability for the economy in the near-term.
But there are signs that the Federal Reserve’s aggressive interest rate hikes are starting to cool the labor market, with a decline in the share of consumers viewing jobs as “plentiful” and a rise in those saying employment was “hard to get.”
“The biggest risk is the unknown lagged effects from the Fed’s cumulative tightening and the economy may not feel the full effects until next year when recession risks are high,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.
The Conference Board’s consumer confidence index fell to 102.5 this month from 107.8 in September.
Economists polled by Reuters had forecast the index at 106.5.
The decline in confidence was across all age groups, but more pronounced in the 35-54 and well as the 55 and over cohorts.
Regionally, there were marked decreases in Florida, probably because of Hurricane Ian, and Ohio.
Consumers’ 12-month inflation expectations rose to 7.0%, likely reflecting a recent reversal in gasoline prices after falling over the summer, from 6.8% last month.
Food also remains very expensive.
Stubbornly high inflation and fading confidence are a blow to President Joe Biden and Democrats’ hopes of retaining control of Congress in Nov. 8 mid-term elections.
The Fed, fighting the fastest-rising inflation in 40 years, has raised its benchmark overnight interest rate from near zero in March to the current range of 3.00% to 3.25%, the swiftest pace of policy tightening in a generation or more.
That rate is likely to end the year in the mid-4% range, based on the U.S. central bank officials’ own projections and recent comments.
The survey’s present situation index, based on consumers’ assessment of current business and labor market conditions, tumbled to 138.9, the lowest level since April 2021, from 150.2 in September.
Its expectations index, based on consumers’ short-term outlook for income, business and labor market conditions, fell to 78.1 from 79.5 last month.
The expectations index remains below a reading of 80, a level associated with a recession and suggests that the risks of a downturn could be rising.
The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, dropped to 32.5, the lowest reading since April 2021, from 38.1 in September.
This measure correlates to the unemployment rate from the Labor Department and is still high by historical standards.
Unemployment benefits data show the labor market remains tight.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
SPENDING PLANS RISE
Even as consumers worried about the economy’s outlook, they remained interested in buying big-ticket items over the next six months, though they pulled back on travel plans, suggesting many Americans intended to stay home over the holiday season.
The share of consumers planning to buy motor vehicles increased to the highest level since July 2020.
More consumers planned to buy appliances such as refrigerators, washing machines and vacuum cleaners.
“Consumers have abundant excess saving and they are willing to dig into this pile of cash to keep their real spending at least stable, even as inflation eats into their real incomes,” said Scott Hoyt, senior economist at Moody’s Analytics in West Chester, Pennsylvania.
Consumers were also more inclined to buy a house, probably encouraged by a sharp slowdown in house price inflation.
But surging mortgage rates remain an obstacle.
The 30-year fixed mortgage rate averaged 6.94% last week, the highest in 20 years, up from 6.92% in the prior week, according to data from mortgage finance agency Freddie Mac.
A separate report on Tuesday showed the S&P CoreLogic Case-Shiller national home price index increased 13.0% year-on-year in August after advancing 15.6% in July.
On a monthly basis, prices fell 0.9% in August, the second straight monthly drop.
A third report from the Federal Housing Finance Agency showed home prices increased 11.9% in the 12 months through August after rising 13.9% in July.
Prices fell 0.7% on a monthly basis after decreasing 0.6% in July.
It was the first time since March 2011 that monthly prices posted back-to-back declines.
“We expect home price inflation to slow in the remainder of 2022, falling to single digits by year-end and to zero by the second quarter of 2023,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics in New York.
“With home sales falling as deteriorating affordability sidelines many buyers, prices will have to adjust."
"However, inventory remains low, and we think that will keep a floor under home prices.”
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/article/usa-eco ... SL1N31Q1KX
"Inflation worries hurt U.S. consumer confidence; house prices decelerating"
By Lucia Mutikani
OCTOBER 25, 2022
WASHINGTON (Reuters) - U.S. consumer confidence ebbed in October after two straight monthly increases amid rising concerns about inflation and a possible recession next year, but households remained keen to purchase big-ticket items like motor vehicles and appliances.
The Conference Board survey on Tuesday also showed more consumers planned to buy a home over the next six months, despite soaring borrowing costs.
The steady rise in consumers’ buying intentions could provide some stability for the economy in the near-term.
But there are signs that the Federal Reserve’s aggressive interest rate hikes are starting to cool the labor market, with a decline in the share of consumers viewing jobs as “plentiful” and a rise in those saying employment was “hard to get.”
“The biggest risk is the unknown lagged effects from the Fed’s cumulative tightening and the economy may not feel the full effects until next year when recession risks are high,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.
The Conference Board’s consumer confidence index fell to 102.5 this month from 107.8 in September.
Economists polled by Reuters had forecast the index at 106.5.
The decline in confidence was across all age groups, but more pronounced in the 35-54 and well as the 55 and over cohorts.
Regionally, there were marked decreases in Florida, probably because of Hurricane Ian, and Ohio.
Consumers’ 12-month inflation expectations rose to 7.0%, likely reflecting a recent reversal in gasoline prices after falling over the summer, from 6.8% last month.
Food also remains very expensive.
Stubbornly high inflation and fading confidence are a blow to President Joe Biden and Democrats’ hopes of retaining control of Congress in Nov. 8 mid-term elections.
The Fed, fighting the fastest-rising inflation in 40 years, has raised its benchmark overnight interest rate from near zero in March to the current range of 3.00% to 3.25%, the swiftest pace of policy tightening in a generation or more.
That rate is likely to end the year in the mid-4% range, based on the U.S. central bank officials’ own projections and recent comments.
The survey’s present situation index, based on consumers’ assessment of current business and labor market conditions, tumbled to 138.9, the lowest level since April 2021, from 150.2 in September.
Its expectations index, based on consumers’ short-term outlook for income, business and labor market conditions, fell to 78.1 from 79.5 last month.
The expectations index remains below a reading of 80, a level associated with a recession and suggests that the risks of a downturn could be rising.
The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, dropped to 32.5, the lowest reading since April 2021, from 38.1 in September.
This measure correlates to the unemployment rate from the Labor Department and is still high by historical standards.
Unemployment benefits data show the labor market remains tight.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
SPENDING PLANS RISE
Even as consumers worried about the economy’s outlook, they remained interested in buying big-ticket items over the next six months, though they pulled back on travel plans, suggesting many Americans intended to stay home over the holiday season.
The share of consumers planning to buy motor vehicles increased to the highest level since July 2020.
More consumers planned to buy appliances such as refrigerators, washing machines and vacuum cleaners.
“Consumers have abundant excess saving and they are willing to dig into this pile of cash to keep their real spending at least stable, even as inflation eats into their real incomes,” said Scott Hoyt, senior economist at Moody’s Analytics in West Chester, Pennsylvania.
Consumers were also more inclined to buy a house, probably encouraged by a sharp slowdown in house price inflation.
But surging mortgage rates remain an obstacle.
The 30-year fixed mortgage rate averaged 6.94% last week, the highest in 20 years, up from 6.92% in the prior week, according to data from mortgage finance agency Freddie Mac.
A separate report on Tuesday showed the S&P CoreLogic Case-Shiller national home price index increased 13.0% year-on-year in August after advancing 15.6% in July.
On a monthly basis, prices fell 0.9% in August, the second straight monthly drop.
A third report from the Federal Housing Finance Agency showed home prices increased 11.9% in the 12 months through August after rising 13.9% in July.
Prices fell 0.7% on a monthly basis after decreasing 0.6% in July.
It was the first time since March 2011 that monthly prices posted back-to-back declines.
“We expect home price inflation to slow in the remainder of 2022, falling to single digits by year-end and to zero by the second quarter of 2023,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics in New York.
“With home sales falling as deteriorating affordability sidelines many buyers, prices will have to adjust."
"However, inventory remains low, and we think that will keep a floor under home prices.”
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/article/usa-eco ... SL1N31Q1KX
Re: THE HOUSING MARKET
REUTERS
"U.S. mortgage interest rates jump to 7.16%, highest since 2001"
Reuters
October 26, 2022
Oct 26 (Reuters) - The average interest rate on the most popular U.S. home loan rose to its highest level since 2001 as tightening financial conditions weigh on the housing sector, data from the Mortgage Bankers Association (MBA) showed on Wednesday.
The average contract rate on a 30-year fixed-rate mortgage rose by 22 basis points to 7.16% for the week ended Oct. 21 while the MBA's Market Composite Index, a measure of mortgage loan application volume, fell 1.7% from a week earlier.
Mortgage application activity is at its slowest pace since 1997.
Mortgage rates have more than doubled since the beginning of the year, as the Federal Reserve pursues an aggressive path of interest rate hikes to rein in stubbornly high inflation.
The central bank is expected to raise rates by 75 basis points for a fourth straight time at the conclusion of its next policy meeting on Nov. 1-2.
Those actions, designed to cool the economy sufficiently to curb price pressures, have weighed heavily on the interest-rate-sensitive housing sector as expectations for Fed tightening have led to a surge in Treasury yields.
The yield on the 10-year note acts as a benchmark for mortgage rates.
Reporting by Lindsay Dunsmuir; Editing by Clarence Fernandez
https://www.reuters.com/markets/us/us-m ... 022-10-26/
"U.S. mortgage interest rates jump to 7.16%, highest since 2001"
Reuters
October 26, 2022
Oct 26 (Reuters) - The average interest rate on the most popular U.S. home loan rose to its highest level since 2001 as tightening financial conditions weigh on the housing sector, data from the Mortgage Bankers Association (MBA) showed on Wednesday.
The average contract rate on a 30-year fixed-rate mortgage rose by 22 basis points to 7.16% for the week ended Oct. 21 while the MBA's Market Composite Index, a measure of mortgage loan application volume, fell 1.7% from a week earlier.
Mortgage application activity is at its slowest pace since 1997.
Mortgage rates have more than doubled since the beginning of the year, as the Federal Reserve pursues an aggressive path of interest rate hikes to rein in stubbornly high inflation.
The central bank is expected to raise rates by 75 basis points for a fourth straight time at the conclusion of its next policy meeting on Nov. 1-2.
Those actions, designed to cool the economy sufficiently to curb price pressures, have weighed heavily on the interest-rate-sensitive housing sector as expectations for Fed tightening have led to a surge in Treasury yields.
The yield on the 10-year note acts as a benchmark for mortgage rates.
Reporting by Lindsay Dunsmuir; Editing by Clarence Fernandez
https://www.reuters.com/markets/us/us-m ... 022-10-26/
Re: THE HOUSING MARKET
THE WASHINGTON EXAMINER
"Soaring mortgage rates add to Biden midterm headaches"
Haisten Willis
28 OCTOBER 2022
Bad headlines keep coming for President Joe Biden as he tries to hold bare congressional majorities in the final two years of his term.
The latest: Mortgage rates have climbed above 7% for the first time since 2001, making it more difficult for people to buy a house and squeezing the rest of the economy.
With inflation and economic concerns topping voter worries ahead of the Nov. 8 midterm elections, bad news about the housing market is one more weight around the neck of the party in power.
It's one that Democrats have to overcome as they make their case to voters in the campaign's final week.
Party leaders, including Biden, seem to realize they must confront economic issues head-on.
But that wasn't the case for much of August, September, or even October, and it may be too late for Democrats to change perceptions this late in the game.
"Going down the stretch, we need to make sure our closing message also talks about the cost of living, inflation, and the economy,” a quartet of veteran Democratic operatives wrote in an Oct. 21 "memo" to Democrats in the liberal American Prospect.
"Rising costs will beat us if we avoid the issue,” wrote Patrick Gaspard, the president and chief executive officer of the Center for American Progress, longtime Democratic pollsters Stanley B. Greenberg and Celinda Lake, and Mike Lux, a leading progressive activist and former senior Clinton White House staffer.
Five days later, the uphill battle became even tougher as mortgage rates crossed the 7% threshold, up from just 3% in January.
While that figure may seem small, every percentage point gain in mortgage rates translates to thousands of dollars a year in higher costs for would-be homeowners.
At 3%, a $300,000 loan will cost a homeowner $1,265 per month, not including taxes and fees.
At 7%, that same $300,000 mortgage costs $2,000 a month.
Put another way, a housing budget of $1,265 a month would buy a $300,000 house in January, but it will now only buy a $180,000 home.
"It means that demand for housing is collapsing," said Desmond Lachman, a senior fellow at the American Enterprise Institute.
"The housing market looks like it's already in a recession."
A bad housing market eventually fans out to the wider economy, with construction layoffs leading to less spending, which then leads to more layoffs.
While there won't a full-blown recession ahead of the midterm elections, polls consistently show that inflation tops voter concerns and that they trust Republicans more than Democrats on the issue by a 2-to-1 margin.
Democrats tend to focus elsewhere, especially on abortion, but also on climate change, student loans, and Donald Trump-aligned "MAGA" Republicans.
Vice President Kamala Harris has gone on tour for meetings on reproductive rights in states including California, Florida, Indiana, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Pennsylvania, Texas, and Virginia, along with similar meetings with groups traveling to Washington, D.C.
Biden, meanwhile, promised to sign an abortion-related bill on the first day of the new Congress if the Democrats maintain control.
But several party leaders, including Sen. Bernie Sanders (I-VT) and former Obama adviser David Axelrod, are sounding the alarm that Democrats can't leave out the economy — especially with inflation staring people in the face every time they visit a gas station or grocery store.
Democratic strategist Brad Bannon agrees.
"It's pretty clear that Americans vote with their pocketbooks, and for that reason, it's very important for Democrats to focus on the Republican threats against Social Security and Medicare," Bannon told the Washington Examiner.
A strong message, in Bannon's estimation, would focus on how Republicans want to repeal the Inflation Reduction Act, which could mean higher drug costs for seniors, and how House Minority Leader Kevin McCarthy (R-CA), if he becomes speaker, may lead the charge in trying to cut Social Security and Medicare.
Biden has been making more economy-focused statements in recent weeks.
He gave a speech on plans to tackle "junk fees" from banks, airlines, and hotels on Oct. 26.
And Biden has also said that GOP "mega-MAGA trickle-down" economics would cripple the economy.
Republicans are hammering on the wobbly economy as part of their core midterm message, along with crime and illegal immigration.
McCarthy has accused the Democrats of running the economy "into the ground," contrasting it with Republicans who seek to offer "a new direction that gets our country back on track."
A collapsing housing market and the crushing effect it will have on the wider economy may not be a deciding factor in the midterm elections.
But it could be a sign that further economic pain will play a big role in the next election.
AEI's Lachman predicts that unemployment will eventually rise too, taking away one of the last Democratic talking points on the economy — and that a full-blown recession could be in order.
"Voters are worried about inflation more so than mortgage rates, but it all derives from the fact that inflation went too high, and now the Federal Reserve is having to slam the breaks," Lachman told the Washington Examiner.
"The party is over."
https://www.msn.com/en-us/news/politics ... 1a99012afb
"Soaring mortgage rates add to Biden midterm headaches"
Haisten Willis
28 OCTOBER 2022
Bad headlines keep coming for President Joe Biden as he tries to hold bare congressional majorities in the final two years of his term.
The latest: Mortgage rates have climbed above 7% for the first time since 2001, making it more difficult for people to buy a house and squeezing the rest of the economy.
With inflation and economic concerns topping voter worries ahead of the Nov. 8 midterm elections, bad news about the housing market is one more weight around the neck of the party in power.
It's one that Democrats have to overcome as they make their case to voters in the campaign's final week.
Party leaders, including Biden, seem to realize they must confront economic issues head-on.
But that wasn't the case for much of August, September, or even October, and it may be too late for Democrats to change perceptions this late in the game.
"Going down the stretch, we need to make sure our closing message also talks about the cost of living, inflation, and the economy,” a quartet of veteran Democratic operatives wrote in an Oct. 21 "memo" to Democrats in the liberal American Prospect.
"Rising costs will beat us if we avoid the issue,” wrote Patrick Gaspard, the president and chief executive officer of the Center for American Progress, longtime Democratic pollsters Stanley B. Greenberg and Celinda Lake, and Mike Lux, a leading progressive activist and former senior Clinton White House staffer.
Five days later, the uphill battle became even tougher as mortgage rates crossed the 7% threshold, up from just 3% in January.
While that figure may seem small, every percentage point gain in mortgage rates translates to thousands of dollars a year in higher costs for would-be homeowners.
At 3%, a $300,000 loan will cost a homeowner $1,265 per month, not including taxes and fees.
At 7%, that same $300,000 mortgage costs $2,000 a month.
Put another way, a housing budget of $1,265 a month would buy a $300,000 house in January, but it will now only buy a $180,000 home.
"It means that demand for housing is collapsing," said Desmond Lachman, a senior fellow at the American Enterprise Institute.
"The housing market looks like it's already in a recession."
A bad housing market eventually fans out to the wider economy, with construction layoffs leading to less spending, which then leads to more layoffs.
While there won't a full-blown recession ahead of the midterm elections, polls consistently show that inflation tops voter concerns and that they trust Republicans more than Democrats on the issue by a 2-to-1 margin.
Democrats tend to focus elsewhere, especially on abortion, but also on climate change, student loans, and Donald Trump-aligned "MAGA" Republicans.
Vice President Kamala Harris has gone on tour for meetings on reproductive rights in states including California, Florida, Indiana, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Pennsylvania, Texas, and Virginia, along with similar meetings with groups traveling to Washington, D.C.
Biden, meanwhile, promised to sign an abortion-related bill on the first day of the new Congress if the Democrats maintain control.
But several party leaders, including Sen. Bernie Sanders (I-VT) and former Obama adviser David Axelrod, are sounding the alarm that Democrats can't leave out the economy — especially with inflation staring people in the face every time they visit a gas station or grocery store.
Democratic strategist Brad Bannon agrees.
"It's pretty clear that Americans vote with their pocketbooks, and for that reason, it's very important for Democrats to focus on the Republican threats against Social Security and Medicare," Bannon told the Washington Examiner.
A strong message, in Bannon's estimation, would focus on how Republicans want to repeal the Inflation Reduction Act, which could mean higher drug costs for seniors, and how House Minority Leader Kevin McCarthy (R-CA), if he becomes speaker, may lead the charge in trying to cut Social Security and Medicare.
Biden has been making more economy-focused statements in recent weeks.
He gave a speech on plans to tackle "junk fees" from banks, airlines, and hotels on Oct. 26.
And Biden has also said that GOP "mega-MAGA trickle-down" economics would cripple the economy.
Republicans are hammering on the wobbly economy as part of their core midterm message, along with crime and illegal immigration.
McCarthy has accused the Democrats of running the economy "into the ground," contrasting it with Republicans who seek to offer "a new direction that gets our country back on track."
A collapsing housing market and the crushing effect it will have on the wider economy may not be a deciding factor in the midterm elections.
But it could be a sign that further economic pain will play a big role in the next election.
AEI's Lachman predicts that unemployment will eventually rise too, taking away one of the last Democratic talking points on the economy — and that a full-blown recession could be in order.
"Voters are worried about inflation more so than mortgage rates, but it all derives from the fact that inflation went too high, and now the Federal Reserve is having to slam the breaks," Lachman told the Washington Examiner.
"The party is over."
https://www.msn.com/en-us/news/politics ... 1a99012afb
Re: THE HOUSING MARKET
REUTERS
"U.S. existing home sales plunge; tight inventory keeps prices rising"
By Lucia Mutikani
November 18, 2022
Summary
* Existing home sales drop 5.9% in October
* Median house price up 6.6% to $379,100 from year ago
* Supply falls 0.8% to 1.22 million units
WASHINGTON, Nov 18 (Reuters) - U.S. existing home sales tumbled for a record ninth straight month in October as the 30-year fixed mortgage rate hit a 20-year high and prices remained elevated, pushing homeownership out of the reach of many Americans.
Despite the broad decline in sales reported by the National Association of Realtors on Friday, housing supply remained tight, with considerably fewer homes coming on the market than in the prior year.
The housing market has been the sector hardest hit by aggressive Federal Reserve interest rate hikes that are aimed at quelling high inflation by dampening demand in the economy.
"The combination of rising house prices and mortgage rates have sent housing affordability plummeting," said Daniel Vielhaber, an economist at Nationwide in Columbus, Ohio.
"The decline in affordability is by design to some extent."
"The Fed's goal of slowing economic demand by raising interest rates starts with home sales."
Existing home sales dropped 5.9% to a seasonally adjusted annual rate of 4.43 million units last month.
Outside the plunge during the initial phase of the COVID-19 pandemic in the spring of 2020, this was the lowest level since December 2011.
Economists polled by Reuters had forecast home sales would tumble to a rate of 4.38 million units.
House resales, which account for a big chunk of U.S. home sales, slumped 28.4% on a year-on-year basis in October.
That was the largest drop since February 2008.
The report followed on the heels of news on Thursday that single-family homebuilding and permits for future construction tumbled to the lowest levels since May 2020.
Housing inventory also declined.
The 30-year fixed mortgage rate breached 7% in October for the first time since 2002, according to data from mortgage finance agency Freddie Mac.
The rate averaged 6.61% in the latest week.
The U.S. central bank's rate-hiking cycle, the fastest since the 1980s, has raised the risks of a recession.
A separate report from The Conference Board on Friday showed the leading indicator, a gauge of future U.S. economic activity, declined 0.8% in October after sliding 0.5% in September.
The index has now dropped for eight straight months.
"The trajectory for growth looks weak," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.
"A deteriorating housing market, nagging inflation and an aggressive Fed puts the economy on unsure footing for 2023."
Stocks on Wall Street rose.
The dollar was steady against a basket of currencies.
U.S. Treasury prices fell.
MULTIPLE OFFERS
Existing home sales dropped sharply in all four regions.
Sales also declined across all price points on a year-on-year basis.
Even as demand weakens, housing supply remains tight, limiting the slowdown in house price inflation.
The median existing house price increased 6.6% from a year earlier to $379,100 in October.
That marked 128 straight months of year-over-year house price increases, the longest such streak on record.
Though price growth has slowed from June's peak, in line with normal trends, the NAR estimated that prices in October were considerably above their pre-pandemic level.
The realtors group also reported multiple offers continued in some areas and 24% of homes sold last month were above the asking price, reflecting the still-tight inventory environment.
On the other hand, homes unsold after more than 120 days saw prices reduced by an average of 15.8%.
There were 1.22 million previously owned homes on the market, down 0.8% from both September and a year ago.
New listings were about 10% to 20% lower in most areas compared to October 2021.
Higher borrowing costs are discouraging homeowners, who would normally want to downsize or upgrade, from putting their houses on the market.
At October's sales pace, it would take 3.3 months to exhaust the current inventory of existing homes, up from 2.4 months a year ago.
That rise was mostly due to fewer buyers being in the market.
A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
Properties typically remained on the market for 21 days last month, up from 19 days in September.
Sixty-four percent of homes sold in October 2022 were on the market for less than a month.
First-time buyers accounted for 28% of purchases, down from 29% in September and a year ago.
All-cash sales made up 26% of transactions, up from 24% a year ago.
"Recent downward movement in mortgage rates might provide some reprieve in the coming months, but with home values appearing to hold strong, affordability challenges remain top of mind," said Nicole Bachaud, senior economist at Zillow in Seattle.
Reporting by Lucia Mutikani; Editing by Paul Simao and Andrea Ricci
https://www.reuters.com/markets/us/us-e ... 022-11-18/
"U.S. existing home sales plunge; tight inventory keeps prices rising"
By Lucia Mutikani
November 18, 2022
Summary
* Existing home sales drop 5.9% in October
* Median house price up 6.6% to $379,100 from year ago
* Supply falls 0.8% to 1.22 million units
WASHINGTON, Nov 18 (Reuters) - U.S. existing home sales tumbled for a record ninth straight month in October as the 30-year fixed mortgage rate hit a 20-year high and prices remained elevated, pushing homeownership out of the reach of many Americans.
Despite the broad decline in sales reported by the National Association of Realtors on Friday, housing supply remained tight, with considerably fewer homes coming on the market than in the prior year.
The housing market has been the sector hardest hit by aggressive Federal Reserve interest rate hikes that are aimed at quelling high inflation by dampening demand in the economy.
"The combination of rising house prices and mortgage rates have sent housing affordability plummeting," said Daniel Vielhaber, an economist at Nationwide in Columbus, Ohio.
"The decline in affordability is by design to some extent."
"The Fed's goal of slowing economic demand by raising interest rates starts with home sales."
Existing home sales dropped 5.9% to a seasonally adjusted annual rate of 4.43 million units last month.
Outside the plunge during the initial phase of the COVID-19 pandemic in the spring of 2020, this was the lowest level since December 2011.
Economists polled by Reuters had forecast home sales would tumble to a rate of 4.38 million units.
House resales, which account for a big chunk of U.S. home sales, slumped 28.4% on a year-on-year basis in October.
That was the largest drop since February 2008.
The report followed on the heels of news on Thursday that single-family homebuilding and permits for future construction tumbled to the lowest levels since May 2020.
Housing inventory also declined.
The 30-year fixed mortgage rate breached 7% in October for the first time since 2002, according to data from mortgage finance agency Freddie Mac.
The rate averaged 6.61% in the latest week.
The U.S. central bank's rate-hiking cycle, the fastest since the 1980s, has raised the risks of a recession.
A separate report from The Conference Board on Friday showed the leading indicator, a gauge of future U.S. economic activity, declined 0.8% in October after sliding 0.5% in September.
The index has now dropped for eight straight months.
"The trajectory for growth looks weak," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.
"A deteriorating housing market, nagging inflation and an aggressive Fed puts the economy on unsure footing for 2023."
Stocks on Wall Street rose.
The dollar was steady against a basket of currencies.
U.S. Treasury prices fell.
MULTIPLE OFFERS
Existing home sales dropped sharply in all four regions.
Sales also declined across all price points on a year-on-year basis.
Even as demand weakens, housing supply remains tight, limiting the slowdown in house price inflation.
The median existing house price increased 6.6% from a year earlier to $379,100 in October.
That marked 128 straight months of year-over-year house price increases, the longest such streak on record.
Though price growth has slowed from June's peak, in line with normal trends, the NAR estimated that prices in October were considerably above their pre-pandemic level.
The realtors group also reported multiple offers continued in some areas and 24% of homes sold last month were above the asking price, reflecting the still-tight inventory environment.
On the other hand, homes unsold after more than 120 days saw prices reduced by an average of 15.8%.
There were 1.22 million previously owned homes on the market, down 0.8% from both September and a year ago.
New listings were about 10% to 20% lower in most areas compared to October 2021.
Higher borrowing costs are discouraging homeowners, who would normally want to downsize or upgrade, from putting their houses on the market.
At October's sales pace, it would take 3.3 months to exhaust the current inventory of existing homes, up from 2.4 months a year ago.
That rise was mostly due to fewer buyers being in the market.
A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
Properties typically remained on the market for 21 days last month, up from 19 days in September.
Sixty-four percent of homes sold in October 2022 were on the market for less than a month.
First-time buyers accounted for 28% of purchases, down from 29% in September and a year ago.
All-cash sales made up 26% of transactions, up from 24% a year ago.
"Recent downward movement in mortgage rates might provide some reprieve in the coming months, but with home values appearing to hold strong, affordability challenges remain top of mind," said Nicole Bachaud, senior economist at Zillow in Seattle.
Reporting by Lucia Mutikani; Editing by Paul Simao and Andrea Ricci
https://www.reuters.com/markets/us/us-e ... 022-11-18/
Re: THE HOUSING MARKET
THE NEW YORK POST
"Condo prices in San Francisco plummet as drug abuse and crime soar"
Story by Mary K. Jacob
19 DECEMBER 2022
Luxury condo prices in the heart of downtown San Francisco have plummeted as drug abuse and crime have spiraled out control — and as many techies continue to work remotely.
Data analyzed by Compass shows the Golden Gate city — once pegged as the hottest real estate market globally — has since fallen fast.
The median sale price of a two-bedroom condo, for example, has fallen 16.5% since 2021, while sale prices in surrounding areas have slipped only 7%, according to the market report.
“I knew that market segment had weakened, but I didn’t realize the degree to which things had changed,” Patrick Carlisle, the chief market analyst for Compass, noted.
“It was a bit shocking.”
“San Francisco went from being the hottest office market in the world to just about the weakest,” Carlisle added.
Since December of last year, the condo median sales price dropped from $1.47 million to $1.23 million in the greater downtown and South of Market district.
Compass doesn’t beat around the bush in this report, citing “a triple whammy of economic, demographic and quality-of-life issues.”
The report highlighted that high-rise housing intended to accommodate hundreds of thousands of workers who inundated the city each morning.
But with people now working from home, demand for it has dwindled.
Since the massive exodus of workers, the rapid decline in housing prices has since been attributed to the area’s high crime rate and growing homeless population, which Carlisle explains has affected the “quality of life ambiance” that the city once offered.
“High tech workers were the ones who were most likely to say, ‘well if I can work from any place, I’ll move some place where housing costs 90 percent less.”‘
The report also comes months after it was revealed that San Francisco’s ultra-luxurious Four Seasons Residences sold just 13 of its 146 units in the two years since its opening.
Prospective buyers, who included Steph and Ayesha Curry, have snubbed the high-rise, where condos are priced up to $49 million.
San Francisco occupancy is just at 39% as of late September — one of the lowest in the nation.
Comparatively, New York City reported a 46% occupancy — and Los Angeles, which had 45% occupancy around the same time.
Carlisle explained that for the downtown condo market to make any sort of comeback, offices would need to start filling up again.
In 2020, San Francisco was in the top three cities with the highest property crime, according to data from the SF Chronicle.
More than 4,400 incidents of property crime per 100,000 residents were reported.
In July 2022, the Chronicle asked 1,653 San Francisco residents which problem in the city needed to be addressed most urgently.
Crime and public safety were the second most common answers after homelessness.
https://www.msn.com/en-us/money/realest ... 005fe0baeb
"Condo prices in San Francisco plummet as drug abuse and crime soar"
Story by Mary K. Jacob
19 DECEMBER 2022
Luxury condo prices in the heart of downtown San Francisco have plummeted as drug abuse and crime have spiraled out control — and as many techies continue to work remotely.
Data analyzed by Compass shows the Golden Gate city — once pegged as the hottest real estate market globally — has since fallen fast.
The median sale price of a two-bedroom condo, for example, has fallen 16.5% since 2021, while sale prices in surrounding areas have slipped only 7%, according to the market report.
“I knew that market segment had weakened, but I didn’t realize the degree to which things had changed,” Patrick Carlisle, the chief market analyst for Compass, noted.
“It was a bit shocking.”
“San Francisco went from being the hottest office market in the world to just about the weakest,” Carlisle added.
Since December of last year, the condo median sales price dropped from $1.47 million to $1.23 million in the greater downtown and South of Market district.
Compass doesn’t beat around the bush in this report, citing “a triple whammy of economic, demographic and quality-of-life issues.”
The report highlighted that high-rise housing intended to accommodate hundreds of thousands of workers who inundated the city each morning.
But with people now working from home, demand for it has dwindled.
Since the massive exodus of workers, the rapid decline in housing prices has since been attributed to the area’s high crime rate and growing homeless population, which Carlisle explains has affected the “quality of life ambiance” that the city once offered.
“High tech workers were the ones who were most likely to say, ‘well if I can work from any place, I’ll move some place where housing costs 90 percent less.”‘
The report also comes months after it was revealed that San Francisco’s ultra-luxurious Four Seasons Residences sold just 13 of its 146 units in the two years since its opening.
Prospective buyers, who included Steph and Ayesha Curry, have snubbed the high-rise, where condos are priced up to $49 million.
San Francisco occupancy is just at 39% as of late September — one of the lowest in the nation.
Comparatively, New York City reported a 46% occupancy — and Los Angeles, which had 45% occupancy around the same time.
Carlisle explained that for the downtown condo market to make any sort of comeback, offices would need to start filling up again.
In 2020, San Francisco was in the top three cities with the highest property crime, according to data from the SF Chronicle.
More than 4,400 incidents of property crime per 100,000 residents were reported.
In July 2022, the Chronicle asked 1,653 San Francisco residents which problem in the city needed to be addressed most urgently.
Crime and public safety were the second most common answers after homelessness.
https://www.msn.com/en-us/money/realest ... 005fe0baeb
Re: THE HOUSING MARKET
REUTERS
"Higher mortgage rates depress U.S. single-family housing starts, building permits"
By Lucia Mutikani
December 20, 2022
Summary
* Housing starts fall 0.5% in November
* Single-family starts drop 4.1%; multi-family up 4.8%
* Building permits plunge 11.2%; single-family fall 7.1%
WASHINGTON, Dec 20 (Reuters) - U.S. single-family homebuilding tumbled to a 2-1/2-year low in November and permits for future construction plunged as higher mortgage rates continued to depress housing market activity.
The dour report from the Commerce Department on Tuesday followed on the heels of news on Monday that confidence among homebuilders plummeted for a record 12th month in December.
It put residential investment on track to contract for the seventh consecutive quarter, which would be the longest such stretch since the collapse of the housing bubble triggered the Great Recession.
The housing market has borne the brunt of the Federal Reserve's fastest interest rate-hiking cycle since the 1980s as the U.S. central bank wages war against inflation.
"The Fed's rate hikes are doing what they are supposed to, further deepening the recession in the residential housing construction markets," said Christopher Rupkey, chief economist at FWDBONDS in New York.
"There's nowhere for homebuilders to hide."
"We don't know about the rest of the economy, but the housing market is clearly in recession."
Single-family housing starts, which account for the biggest share of homebuilding, dropped 4.1% to a seasonally adjusted annual rate of 828,000 units last month.
That was the lowest level since May 2020, when the economy was reeling from the first wave of the COVID-19 pandemic.
Outside the pandemic plunge, single-family starts are the weakest since February 2019.
Single-family homebuilding decreased in the South and Midwest, generally considered as the more affordable regions of the United States.
It increased in the Northeast and West.
Starts for housing projects with five units or more surged 4.8% to a rate of 584,000 units, the highest level since April.
Multi-family housing construction is being driven by strong demand for rental accommodation as the higher mortgage rates force many potential homebuyers to remain renters.
The 30-year fixed mortgage rate surged to above 7% a few months ago, the highest since 2002, according to data from mortgage finance agency Freddie Mac.
Though the rate has since retreated to an average of 6.31% last week, it is double what it was that time a year ago.
Rates could start pushing higher after the Fed last week signaled additional rate increases by the end of 2023, sending Treasury yields soaring.
Mortgage rates move in tandem with Treasury yields.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies after the Bank of Japan stunned markets by deciding to review its yield curve control policy and widen the trading band for the 10-year government bond yield.
U.S. Treasury yields rose.
SINKING CONFIDENCE
Data on Monday showed confidence among single-family homebuilders sinking further in November, pushing the National Association of Home Builders (NAHB)/Wells Fargo housing market index to the lowest level since June 2012, excluding the tumble during the early days of the pandemic in the spring of 2020.
The jump in multi-family housing projects offset some of the drag from single-family housing units, resulting in overall housing starts falling only 0.5% to a rate of 1.427 million units last month.
Economists polled by Reuters had forecast starts would slide to a rate of 1.400 million units.
The Fed is seeking to slow inflation by bringing down demand for everything from housing to labor.
The labor market has remained tight, but economists expect it to start loosening and eventually weaken next year, driven by the housing market.
The housing market has contracted for six straight quarters.
Residential investment is expected to cut off as much as 0.7 percentage point from gross domestic product this quarter.
Growth estimates for the fourth quarter are as high as a 2.8% annualized rate.
The economy grew at a 2.9% pace in the third quarter.
"Housing will play a major role in the coming slowdown in the job market," said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.
"Employment in residential construction, after rebounding quickly from the pandemic, has essentially been flat over the past half-year."
The single-family housing market boomed early in the pandemic as Americans sought bigger properties to accommodate home offices.
The pendulum has now swung in favor of apartments.
But multi-family housing is starting to show some cracks.
Permits for housing projects with five units or more dropped 17.9% to a rate of 509,000 units, the lowest level since May 2021.
Single-family building permits plunged 7.1% to a rate of 781,000 units, the lowest level since May 2020.
Overall, permits for future home construction plunged 11.2% to a rate of 1.342 million units last month, the lowest level since June 2020.
The number of houses approved for construction that are yet to be started fell 2.0% to 293,000 units.
The single-family homebuilding backlog decreased 3.4% to 143,000 units, but the completions rate for this segment increased 9.5% to a rate of 1.047 million units.
The inventory of single-family housing under construction fell 1.3% to a rate of 777,000 million units, the lowest level since December 2021.
The combination of higher mortgage rates, declining single-family homebuilding and inventory could worsen an existing housing shortage and the slow the pace of house price decreases, posing a conundrum for the Fed.
"The limited available inventory fueled by both existing homeowners and homebuilders will keep the market tight, price declines minimal, and competition for desirable homes alive," said Nicole Bachaud, an economist at Zillow in Seattle.
Reporting by Lucia Mutikani; Editing by Paul Simao, Andrea Ricci and Jonathan Oatis
https://www.reuters.com/markets/us/us-s ... 022-12-20/
"Higher mortgage rates depress U.S. single-family housing starts, building permits"
By Lucia Mutikani
December 20, 2022
Summary
* Housing starts fall 0.5% in November
* Single-family starts drop 4.1%; multi-family up 4.8%
* Building permits plunge 11.2%; single-family fall 7.1%
WASHINGTON, Dec 20 (Reuters) - U.S. single-family homebuilding tumbled to a 2-1/2-year low in November and permits for future construction plunged as higher mortgage rates continued to depress housing market activity.
The dour report from the Commerce Department on Tuesday followed on the heels of news on Monday that confidence among homebuilders plummeted for a record 12th month in December.
It put residential investment on track to contract for the seventh consecutive quarter, which would be the longest such stretch since the collapse of the housing bubble triggered the Great Recession.
The housing market has borne the brunt of the Federal Reserve's fastest interest rate-hiking cycle since the 1980s as the U.S. central bank wages war against inflation.
"The Fed's rate hikes are doing what they are supposed to, further deepening the recession in the residential housing construction markets," said Christopher Rupkey, chief economist at FWDBONDS in New York.
"There's nowhere for homebuilders to hide."
"We don't know about the rest of the economy, but the housing market is clearly in recession."
Single-family housing starts, which account for the biggest share of homebuilding, dropped 4.1% to a seasonally adjusted annual rate of 828,000 units last month.
That was the lowest level since May 2020, when the economy was reeling from the first wave of the COVID-19 pandemic.
Outside the pandemic plunge, single-family starts are the weakest since February 2019.
Single-family homebuilding decreased in the South and Midwest, generally considered as the more affordable regions of the United States.
It increased in the Northeast and West.
Starts for housing projects with five units or more surged 4.8% to a rate of 584,000 units, the highest level since April.
Multi-family housing construction is being driven by strong demand for rental accommodation as the higher mortgage rates force many potential homebuyers to remain renters.
The 30-year fixed mortgage rate surged to above 7% a few months ago, the highest since 2002, according to data from mortgage finance agency Freddie Mac.
Though the rate has since retreated to an average of 6.31% last week, it is double what it was that time a year ago.
Rates could start pushing higher after the Fed last week signaled additional rate increases by the end of 2023, sending Treasury yields soaring.
Mortgage rates move in tandem with Treasury yields.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies after the Bank of Japan stunned markets by deciding to review its yield curve control policy and widen the trading band for the 10-year government bond yield.
U.S. Treasury yields rose.
SINKING CONFIDENCE
Data on Monday showed confidence among single-family homebuilders sinking further in November, pushing the National Association of Home Builders (NAHB)/Wells Fargo housing market index to the lowest level since June 2012, excluding the tumble during the early days of the pandemic in the spring of 2020.
The jump in multi-family housing projects offset some of the drag from single-family housing units, resulting in overall housing starts falling only 0.5% to a rate of 1.427 million units last month.
Economists polled by Reuters had forecast starts would slide to a rate of 1.400 million units.
The Fed is seeking to slow inflation by bringing down demand for everything from housing to labor.
The labor market has remained tight, but economists expect it to start loosening and eventually weaken next year, driven by the housing market.
The housing market has contracted for six straight quarters.
Residential investment is expected to cut off as much as 0.7 percentage point from gross domestic product this quarter.
Growth estimates for the fourth quarter are as high as a 2.8% annualized rate.
The economy grew at a 2.9% pace in the third quarter.
"Housing will play a major role in the coming slowdown in the job market," said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.
"Employment in residential construction, after rebounding quickly from the pandemic, has essentially been flat over the past half-year."
The single-family housing market boomed early in the pandemic as Americans sought bigger properties to accommodate home offices.
The pendulum has now swung in favor of apartments.
But multi-family housing is starting to show some cracks.
Permits for housing projects with five units or more dropped 17.9% to a rate of 509,000 units, the lowest level since May 2021.
Single-family building permits plunged 7.1% to a rate of 781,000 units, the lowest level since May 2020.
Overall, permits for future home construction plunged 11.2% to a rate of 1.342 million units last month, the lowest level since June 2020.
The number of houses approved for construction that are yet to be started fell 2.0% to 293,000 units.
The single-family homebuilding backlog decreased 3.4% to 143,000 units, but the completions rate for this segment increased 9.5% to a rate of 1.047 million units.
The inventory of single-family housing under construction fell 1.3% to a rate of 777,000 million units, the lowest level since December 2021.
The combination of higher mortgage rates, declining single-family homebuilding and inventory could worsen an existing housing shortage and the slow the pace of house price decreases, posing a conundrum for the Fed.
"The limited available inventory fueled by both existing homeowners and homebuilders will keep the market tight, price declines minimal, and competition for desirable homes alive," said Nicole Bachaud, an economist at Zillow in Seattle.
Reporting by Lucia Mutikani; Editing by Paul Simao, Andrea Ricci and Jonathan Oatis
https://www.reuters.com/markets/us/us-s ... 022-12-20/
Re: THE HOUSING MARKET
REUTERS
"U.S. consumer confidence rebounds; existing home sales sink"
By Lucia Mutikani
December 21, 2022
Summary
* Consumer confidence index rises to 108.3 in December
* Inflation expectations fall; labor market views strong
* Existing home sales plunge 7.7% in November
WASHINGTON, Dec 21 (Reuters) - U.S. consumer confidence rose to an eight-month high in December as inflation retreated and the labor market remained strong, but fears of a recession persisted, resulting in fewer households planning to make big-ticket purchases over the next six months.
Other data on Wednesday showed sales of previously owned homes falling for a 10th straight month in November, the longest such stretch since 1999.
The economy is on recession watch as the Federal Reserve, which is in the midst of its fastest interest rate-hiking cycle since the 1980s, wages war on inflation by trying to cool demand for everything from housing to labor.
"Consumers may be more confident than they were over the summer months, but they are still exhibiting more caution than was apparent in 2021," said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina.
"The outlook for consumer confidence in 2023 will hinge on the Fed's ability to deliver a soft landing on what could be described as a narrow runway."
The Conference Board said its consumer confidence index increased to 108.3 this month, the highest reading since April, from 101.4 in November.
Economists polled by Reuters had forecast the index at 101.0.
While the survey places more emphasis on the labor market, the rebound in confidence matched a similar rise in the University of Michigan's sentiment index.
Consumers' 12-month inflation expectations fell to 6.7%, the lowest since September 2021, from 7.1% last month.
The improvement, which mostly reflected lower gasoline prices, was in line with recent data showing consumer prices increasing moderately in November.
It also strengthened views that inflation, though still uncomfortably high, peaked months ago.
The present situation index, based on consumers' assessment of current business and labor market conditions, rose to 147.2 from 138.3 last month.
The expectations index, based on consumers' short-term outlook for income, business, and labor market conditions, increased to 82.4 from 76.7.
But this measure remains near 80, a level The Conference Board said was associated with recession.
As a result, consumers were less keen on buying big-ticket items over the next six months.
The share of consumers planning to purchase a motor vehicle was little changed, while intentions to buy appliances were the lowest since July.
That is also a function of higher borrowing costs as most of these goods are bought on credit.
The Fed has hiked its policy rate by 425 basis points this year from near zero to a 4.25%-4.50% range, the highest since late 2007.
Last week, the Fed projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023.
Consumers, however, planned to go on vacation over the next six months, with the share rising to 46.2% from 45.5% in November.
Most intended to vacation locally, which could help to keep a floor under consumer spending.
The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, increased to 35.8 from 31.5 in November.
This measure correlates to the unemployment rate from the Labor Department and the rise in December was consistent with tight labor market conditions.
Stocks on Wall Street were trading higher.
The dollar rose against a basket of currencies.
U.S. Treasury yields fell.
HOARDING WORKERS
Though there have been job losses in the technology sector and the interest over-sensitive housing market, employers have been generally reluctant to lay off workers after struggling to find labor during the COVID-19 pandemic.
But with the housing market in the doldrums, economists believe the labor market will loosen and unemployment increase next year.
Though the housing market accounts for a fraction of the economy, it has a bigger footprint.
Fewer consumers planned to buy a house over the next six months, which could keep homes sales on the back foot.
Existing home sales tumbled 7.7% to a seasonally adjusted annual rate of 4.09 million units last month, the National Association of Realtors said in a separate report on Wednesday.
Outside the plunge during the first wave of the COVID-19 pandemic in the spring of 2020, this was the lowest level since November 2010.
Sales dropped in all four regions and plummeted 35.4% on a year-on-year basis in November.
Reports this week showed confidence among homebuilders dropping for a record 12th straight month in December, while single-family homebuilding and permits tumbled to a 2-1/2-year low in November.
The housing market boomed early in the pandemic as Americans sought bigger properties to accommodate home offices, driving up prices beyond the reach of many.
Even with demand down, supply remains tight, keeping home prices elevated, though the pace of increases is slowing.
The median existing house price increased 3.5% from a year earlier to $370,700 in November.
It was still the highest house price for any November and prices remain about 37% above their pre-pandemic level.
The average rate on a 30-year fixed-rate mortgage surged to above 7% a few months ago, the highest since 2002, according to data from mortgage finance agency Freddie Mac.
Though the rate has since retreated to 6.31% last week, it is double what it was that time a year ago.
"High rates make buying expensive for potential new homeowners, but they also tend to lock potential sellers in place given millions hold sub-4% and even sub-3% mortgages," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.
"We'll need a thaw in mortgage rates before existing home sales warm up in 2023."
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-c ... 022-12-21/
"U.S. consumer confidence rebounds; existing home sales sink"
By Lucia Mutikani
December 21, 2022
Summary
* Consumer confidence index rises to 108.3 in December
* Inflation expectations fall; labor market views strong
* Existing home sales plunge 7.7% in November
WASHINGTON, Dec 21 (Reuters) - U.S. consumer confidence rose to an eight-month high in December as inflation retreated and the labor market remained strong, but fears of a recession persisted, resulting in fewer households planning to make big-ticket purchases over the next six months.
Other data on Wednesday showed sales of previously owned homes falling for a 10th straight month in November, the longest such stretch since 1999.
The economy is on recession watch as the Federal Reserve, which is in the midst of its fastest interest rate-hiking cycle since the 1980s, wages war on inflation by trying to cool demand for everything from housing to labor.
"Consumers may be more confident than they were over the summer months, but they are still exhibiting more caution than was apparent in 2021," said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina.
"The outlook for consumer confidence in 2023 will hinge on the Fed's ability to deliver a soft landing on what could be described as a narrow runway."
The Conference Board said its consumer confidence index increased to 108.3 this month, the highest reading since April, from 101.4 in November.
Economists polled by Reuters had forecast the index at 101.0.
While the survey places more emphasis on the labor market, the rebound in confidence matched a similar rise in the University of Michigan's sentiment index.
Consumers' 12-month inflation expectations fell to 6.7%, the lowest since September 2021, from 7.1% last month.
The improvement, which mostly reflected lower gasoline prices, was in line with recent data showing consumer prices increasing moderately in November.
It also strengthened views that inflation, though still uncomfortably high, peaked months ago.
The present situation index, based on consumers' assessment of current business and labor market conditions, rose to 147.2 from 138.3 last month.
The expectations index, based on consumers' short-term outlook for income, business, and labor market conditions, increased to 82.4 from 76.7.
But this measure remains near 80, a level The Conference Board said was associated with recession.
As a result, consumers were less keen on buying big-ticket items over the next six months.
The share of consumers planning to purchase a motor vehicle was little changed, while intentions to buy appliances were the lowest since July.
That is also a function of higher borrowing costs as most of these goods are bought on credit.
The Fed has hiked its policy rate by 425 basis points this year from near zero to a 4.25%-4.50% range, the highest since late 2007.
Last week, the Fed projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023.
Consumers, however, planned to go on vacation over the next six months, with the share rising to 46.2% from 45.5% in November.
Most intended to vacation locally, which could help to keep a floor under consumer spending.
The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, increased to 35.8 from 31.5 in November.
This measure correlates to the unemployment rate from the Labor Department and the rise in December was consistent with tight labor market conditions.
Stocks on Wall Street were trading higher.
The dollar rose against a basket of currencies.
U.S. Treasury yields fell.
HOARDING WORKERS
Though there have been job losses in the technology sector and the interest over-sensitive housing market, employers have been generally reluctant to lay off workers after struggling to find labor during the COVID-19 pandemic.
But with the housing market in the doldrums, economists believe the labor market will loosen and unemployment increase next year.
Though the housing market accounts for a fraction of the economy, it has a bigger footprint.
Fewer consumers planned to buy a house over the next six months, which could keep homes sales on the back foot.
Existing home sales tumbled 7.7% to a seasonally adjusted annual rate of 4.09 million units last month, the National Association of Realtors said in a separate report on Wednesday.
Outside the plunge during the first wave of the COVID-19 pandemic in the spring of 2020, this was the lowest level since November 2010.
Sales dropped in all four regions and plummeted 35.4% on a year-on-year basis in November.
Reports this week showed confidence among homebuilders dropping for a record 12th straight month in December, while single-family homebuilding and permits tumbled to a 2-1/2-year low in November.
The housing market boomed early in the pandemic as Americans sought bigger properties to accommodate home offices, driving up prices beyond the reach of many.
Even with demand down, supply remains tight, keeping home prices elevated, though the pace of increases is slowing.
The median existing house price increased 3.5% from a year earlier to $370,700 in November.
It was still the highest house price for any November and prices remain about 37% above their pre-pandemic level.
The average rate on a 30-year fixed-rate mortgage surged to above 7% a few months ago, the highest since 2002, according to data from mortgage finance agency Freddie Mac.
Though the rate has since retreated to 6.31% last week, it is double what it was that time a year ago.
"High rates make buying expensive for potential new homeowners, but they also tend to lock potential sellers in place given millions hold sub-4% and even sub-3% mortgages," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.
"We'll need a thaw in mortgage rates before existing home sales warm up in 2023."
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-c ... 022-12-21/