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Economic Commentary

Economic Commentary – October 14, 2024

October 14, 2024
The US housing market is increasingly a focus of attention, with falling mortgage rates raising expectations for increased sales activity. Specifically, it is hoped that falling rates will free up the log jam, blocking entry-level buyers from moving into the market because homeowners have been unwilling to trade up to higher-priced homes in an expensive financing environment. However, mortgage rates have never solely influenced the character of regional residential home markets; employment trends and home price levels (which determine down payment requirements and influence bank mortgage qualification models) also come into play. Home prices still appear to be elevated, causing buyer resistance, while many formerly “hot” markets are showing signs of some sales weakness. Aggregate residential real estate statistics are essentially useless when it comes to understanding the dynamics of highly localized markets. However, this will not stop investors from reading the tea leaves of housing stats, permits, and sales data over the next few weeks. Countering the singularly domestic attention on the US housing market will be ongoing news from China regarding economic stimulus (Where is it? Is it meaningful? Will it be enough?) and an ECB (European Central Bank) interest rate decision that will include significant insight to the thinking of monetary authorities about the strength of the eurozone economies. Most economists and analysts now expect the ECB to cut its target interest rate by 25 bps, a sharp shift from sentiment just a few short weeks ago favoring steady rates. If the ECB cuts rates as expected, the action would seem to underpin the view that the downside risks for the economic growth of the euro area are growing rapidly. Data to Watch:
  1. US Retail Sales for September, released Thursday, October 17
  2. US Industrial Production for September, released Thursday, October 17
  3. US Building Permits for September, released Friday, October 18
  4. European Central Bank Interest Rate Decision, released Thursday, October 17

Suggested Reading:

  1. America’s New Millionaire Class: Plumbers and HVAC Entrepreneurs
  2. Political Uncertainty and Budget Reality Put France in a Financial Vise
  3. China will ‘significantly’ increase spending to revive economic growth

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