This was a slower pace than May, which rose at an annualized rate of 19.9%. But the bottom line is that even though home sales have fallen from their peak, prices are still rising significantly.
This is not a big deal for buyers and sellers. The housing market is a key economic indicator and reflects how interest rate hikes by the Federal Reserve are playing out.
Notice this space. Markets are changing as the Fed’s efforts to curb inflation take effect. Rising mortgage rates make it more expensive to buy a home. In theory, it should cool demand and price over time.
And as long as we’re in a bubble, economists think it will deflate slowly rather than suddenly burst. and we expect it to eventually level off.
“We expect house price growth to completely stall, averaging 0% in 2023,” Goldman Chief Economist Jan Hatzius said in a recent research note. A drop is possible, and while it looks very likely in some areas, a significant drop is unlikely.”
That said, prices are showing more resilience for a reason. Supply is still constrained.
Pandemic-era shortages are limiting the pace of new housing construction. In the past, a housing downturn has been accompanied by a general economic downturn, leading to a flood of existing housing inventory. A recession leads to unemployment and forces cash-strapped homeowners to sell.
With the labor market strong today, housing inflows seem unlikely for this cycle, further prolonging inventory shortages.
On the radar: Unfortunately, Goldman reports that slowing home price gains are unlikely to affect the cost of shelter, a key component of the consumer price index that tracks inflation.
Rising mortgage rates increase the cost of buying a new home, pushing more people into renting and pushing up prices in that market.
What Jobs Data Means for Fed Rate Hikes
Companies are hiring, but Americans are not aggressive.
Update: The number of US open positions in July surprised economists.
According to the latest Jobs and Turnover Survey (JOLTS) data, there were nearly 2 job openings per job seeker in July, up from 1.8 in June.
“The Fed won’t be happy with this report,” Mark Zandy, senior economist at Moody’s Analytics, told CNN Business. It suggests that you are doing well.”
Lesson learned: A strong labor market is likely to encourage the Federal Reserve to continue aggressive rate hikes to cool the economy.
Fed Chairman Jerome Powell last week reiterated his resolve to lower inflation and “keep doing it until the job is done.” ”
it’s all about oil
US oil prices fell 5.5% to settle at $91.64 a barrel, the worst day in five weeks.
The drop is good news for consumers. This could mean that pump prices continue to fall and energy prices, a key indicator of inflation, continue to fall.
Attention: The national average for a gallon of regular gasoline hit $3.84 on Wednesday, according to AAA. A month ago he is down from $4.22.