U.S. Economic, Housing, and Mortgage Market Outlook
The September 2024 economic outlook highlights a slowing U.S. economy amidst ongoing expansion, with mortgage rates dipping slightly in August. Although homebuyers are hopeful for further rate reductions, many remain hesitant to act. As natural disasters become more frequent and severe, renters are increasingly considering relocation to safer areas, while homeowners are focusing on property improvements to mitigate risks. The latest reports indicate a cooling labor market, with rising unemployment and declining job openings, contributing to moderating inflation and cautious consumer behavior. This backdrop suggests that affordability challenges persist, impacting the housing market and builder sentiment.
In the housing sector, while a small uptick in home sales was observed in July, overall activity remains subdued, particularly for new construction. Builder confidence continues to wane, driven by high interest rates and affordability issues. Housing starts have declined, indicating that supply-side constraints may limit the market’s recovery. Notably, natural disaster threats are reshaping housing decisions, particularly among renters and low-income households, who are more likely to seek safer locations. Conversely, many homeowners are investing in property enhancements to reduce risk. As the market navigates these dynamics, the outlook suggests muted home sales but continued modest price appreciation, driven by tight inventory and steady demand.