What’s going on here?
Reports out this week showed signs of US housing activity coming back to life.
What does this mean?
Sky-high mortgage rates have been putting Americans off the housing market, forcing them to forgo the dream of a yard and swing set for a little longer. But with the Federal Reserve hinting at potential rate cuts next year, investors have been buying up Treasuries to lock in the benefits of higher rates before they go. That’s been lowering their yields, and because mortgage rates tend to mirror the bond market, it makes sense that mortgage rates just hit their lowest since June after a five-week slide. So now, Americans have been lining up outside open houses again. Plus, housing construction is up, sales of pre-owned homes have picked up from a 13-year low, and builders are feeling optimistic about future business.
Why should I care?
Zooming out: It’s tarot time.
Economists don’t book psychic appointments: they use the housing market as their crystal ball. Stats like home sales, building permits, and house prices indicate how the economy as a whole is faring – and the latest promising signs are backed up by December’s US consumer confidence rising by the most since early 2021. So with the housing market seeming stable and Americans feeling financially confident, it’s no wonder Goldman Sachs pumped up its economic growth predictions for the last quarter of this year.
The bigger picture: London’s crying.
Homeowners in Britain won’t be quite as cheery, mind you: the average UK home turned 1.2% cheaper between this October and last, the quickest fall in over a decade. The steepest price drops are happening in the capital, too, with folk swapping London life for cheaper, roomier abodes elsewhere. But since the country’s inflation started falling in line in November, the Bank of England may start feeling the pressure from testy homeowners to cut its 15-year-high interest rates.
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Originally Posted December 21, 2023 – It Looks Like The US Housing Market Is Finally On The Mend
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