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Housing Market Outlook:
The housing market's short-term outlook improved in June due to moderating interest rates and better supply conditions. The job market is cooling, and consumer optimism is waning, potentially slowing the economy in the next two quarters. This could benefit the housing market if the Federal Reserve reduces policy rates.
Homebuying and Selling Optimism:
Fannie Mae's Home Purchase Sentiment rebounded in June, with 19% saying it’s a good time to buy, up from 14% in May. Job security sentiment improved, and more consumers believed it was a good time to sell, potentially increasing listings and balancing supply and demand.
Housing Supply and Mortgage Rates:
Housing supply has improved in 2024, partly due to fewer homeowners locked into low mortgage rates. The percentage of homeowners with rates below 5% dropped from 90% two years ago to 76% in May 2024. With rates expected to moderate in the latter half of 2024, further supply improvements could occur.
Consumer Confidence:
The Consumer Confidence Index fell to 100.4 in June from 101.3 in May. Despite a positive stock market outlook, concerns about future income and business conditions affected confidence. Home purchase plans remained unchanged due to high prices, but sentiment might improve if rates decline and prices cool later in 2024.
Job Growth and Labor Market:
The U.S. added 206,000 jobs in June, down from 218,000 in May but exceeding forecasts. Job growth was driven by health care, social assistance, and government sectors. The unemployment rate rose to 4.1%, the highest since November 2021. Wage growth was modest, supporting the case for the Federal Reserve to cut rates in the fall.
Construction Spending:
U.S. construction spending fell by 0.1% in May, the first decrease since October 2022. Residential construction dipped, with private single-family construction down 0.7%. High mortgage rates and reduced homebuyer traffic led to the decline. Home building activity might decrease further before recovering later in the year.
SOURCE : California Association of Realtors
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