It was a slower pace than in May, when they were up 19.9% year on year. But the bottom line is that prices are still rising strongly, even though home sales are down from their peak.
This is important not only for buyers and sellers. The housing market is an important economic indicator and a reflection of how Federal Reserve rate hikes work.
Watch this place: The market is changing as the Fed’s efforts to curb inflation take effect. Rising mortgage rates are making home buying more expensive. In theory, this should bring down demand and prices over time.
And since we are in a bubble, economists believe that it will slowly deflate rather than suddenly burst. The Goldman Sachs team predicts that house price growth will slow sharply in the next couple of quarters and eventually stabilize.
“We expect house price growth to come to a complete halt, averaging 0% in 2023,” Goldman chief economist Jan Hatzius wrote in a recent research note. “While a direct decline in national house prices is possible and seems likely in some regions, a significant decline seems unlikely.”
However: there is a reason prices have shown more resilience. The offer is still limited.
Shortages in the era of the pandemic have limited the pace of new housing construction. In the past, a recession in the housing sector has been accompanied by an economy-wide recession, causing the existing housing stock to flood. The recession leads to unemployment, and homeowners in need of money are forced to sell their homes.
Today’s job market is stable, and it’s unlikely that this cycle will see an influx of housing, further prolonging the inventory shortage.
On the radar: Regrettably, Goldman reports that a slowdown in house prices is unlikely to affect home values, which are an important component of the consumer price index that tracks inflation.
This is because as higher mortgage rates increase the cost of buying a new home, more people will be tempted to rent it, driving prices up in that market.
What Jobs Data Could Mean for the Fed’s Rate Hike
Companies are hiring, but Americans don’t bite.
Last: the number of open positions in the US increased sharply in July, which surprised economists.
According to the latest Jobs and Turnover Survey, or JOLTS, there were about two job openings per job seeker in July, compared to 1.8 in June.
“The Federal Reserve will not be pleased with this report,” Mark Zandi, senior economist at Moody’s Analytics, told CNN Business. “It is very important that the labor market is cooling down and this report suggests that it remained very strong in July.”
Bottom line: A strong labor market is likely to push Federal Reserve officials to continue aggressively raising interest rates in an attempt to cool the economy.
Fed Chairman Jerome Powell reaffirmed his determination to bring inflation down and “keep it there until the job is done” last week, even though the plan, which includes a series of massive interest rate hikes, will bring “some pain.” households and businesses.”
It’s all about the oil
U.S. crude fell 5.5% to $91.64 a barrel in its worst day in five weeks.
The fall is good news for consumers. This could mean that gas station prices continue to fall, while the key indicator of inflation – energy prices – continues to decline.
On the radar: The national average per gallon of regular gasoline hit $3.84 on Wednesday, according to AAA. This is less than $4.22 a month ago.