Economic research

household formation – Realtor.com Economic Research

September 17, 2021

  • To keep up with the rapid changes that COVID-19 is causing in the economy and the housing market, the The economics team of realtor.com® provides a weekly blog and video update on the relevant real estate and economic information you need to know to navigate the housing market in these difficult times.
  • This week, Chief Economist Danielle Hale discusses the latest data on unemployment benefit claims, small business outlookreal income and inflation. Economic data is mixed and inflation is up but showing signs of slowing except for some items.
  • Rent is one of the exceptions. the real estate agent.com August Rent Report by Head of studies Nicolas Bedo shows that rents rose by double digits in August, to a new high.
  • The Fed is meeting next week to consider these dynamics, and Danielle shares her expectations for what we will see from the meeting.
  • Review of Danielle mortgage rate trends and what they mean for homebuyers, and also covers recent accessibility trends as research from Economist Jiayi Xu.
  • Finally, Danielle discusses the real estate agent.com weekly housing trends report which showed that homes continue to sell quickly and at higher prices. This is generally in line with the trends we expect at this time of year, which colleague Nicolas Bedo identified as the Best time to buy a house based on typical seasonal trends. Check the report to find the best week for home buyers in your market.
  • For downloadable data, visit realtor.com/research/data, and for more real-time updates, follow the real estate agent.com® economic team on twitter: @rdc_economics.

VIDEO TRANSCRIPTION:

  • I’m Danielle Hale, Chief Economist for Realtor.com® and here’s what you need to know.
  • We have seen mixed economic data. While UI claims rose slightly, the 4-week average fell. And while small business optimism rose in August, expectations for the next 6 months have dimmed, perhaps because a record half of small business owners reported job openings that don’t could not be filled.
  • For the 4th month in a row, consumer prices rose by 5% or more compared to last year. On a positive note, month-over-month price gains are generally slowing – a sign that inflation may be receding.
  • However, there are a few exceptions, including most energy prices and rents. In fact, our report shows that the median asking rent in the 50 largest markets has grown at a double-digit rate!
  • Notably, consumers expect price growth to continue, and already price inflation has eaten away at real median household income, which has shrunk in 2020.
  • The Fed will review these dynamics at next week’s meeting. Rate changes are not on the table, but we will see updated economic projections and likely learn more about the asset purchase program. News from this meeting could break the recent flat streak in mortgage rates. While a move in either direction is possible, higher rates seem more likely.
  • This week, however, rates have remained stable, even dipping slightly.
  • Low mortgage rates help homebuyers stretch further while higher rates reduce buying power. My colleague Jiayi Xu found that despite recent house price spikes, low rates have largely controlled affordability. Buyers today still spend a historically normal portion of their income on a mortgage payment, but affordability has eroded this year and rising mortgage rates would be another setback.
  • In weekly data from Realtor.com, we see homes continue to sell rapidly and despite more new listings, prices have risen at a faster rate. This increase is unusual for this time of year which normally marks the best time to buy in a handful of major metros according to research by Nicolas Bedo.
  • With fewer buyers and a decent availability of homes for sale, we generally see less competition and lower home prices. Plus, a generally slower market speed means buyers can have more time to consider their options, an especially big bonus for those navigating the process for the first time. Nationally, the best time to buy is early October, but every market is different.
  • Find the best week in your market as well as our housing data to download at realtor.com/research. And you can also follow us on Twitter for real-time updates.

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September 10, 2021

  • To keep up with the rapid changes that COVID-19 is causing in the economy and the housing market, the The economics team of realtor.com® provides a weekly blog and video update on the relevant real estate and economic information you need to know to navigate the housing market in these difficult times.
  • This week, Chief Economist Danielle Hale discusses the latest COVID news. She also shares the latest updates on the very strong job market, from job openings to unemployment claims.
  • Danielle also gives her opinion mortgage rate trends and what it means for buyers and homeowners.
  • Our weekly housing trends report showed that homes continue to sell quickly and at higher prices. A drop in new listings this week is a key data point to watch moving forward.
  • Danielle highlights the research of her colleagues George Ratiu and Hannah Jones on house building and household formation trends and what they mean for the market housing shortage. What are they finding? It’s not going away any time soon.
  • For downloadable data, visit realtor.com/research/data, and for more real-time updates, follow the real estate agent.com® economic team on twitter: @rdc_economics.

VIDEO TRANSCRIPTION:

  • I’m Danielle Hale, Chief Economist for Realtor.com® and here’s what you need to know.
  • As signs of a turn in the Delta wave of the COVID pandemic emerged, the administration announced new vaccine rules for federal workers and big business employees. Estimates suggest these rules will likely apply to more than half of US employees.
  • The announcement follows data this week showing July job postings hit a new high for the 5th consecutive month. With many companies looking to hire, the rate at which workers voluntarily quit their jobs remains high – this is the 8th month in the past 10 that the quit rate has equaled or surpassed pre-pandemic highs. In other words, the massive turnover in the job market continues.
  • Weekly jobless claims also signal a good market for workers, falling to their lowest level since mid-March 2020 and settling slightly above the 300,000 level that might be considered “normal”.
  • Turning to housing data, mortgage rates rose only one basis point this week and have been flat for about the past month. Stable rates help buyers better predict what their monthly payment will be for a given purchase price, and consistently low rates create refinancing opportunities for existing homeowners.
  • In weekly data from Realtor.com, we see that homes continue to sell quickly and at higher prices as the number of homes for sale remains limited. It’s worth noting that the number of homeowners putting a home up for sale this week was 8% lower than last year – the first drop in 9 weeks, but only the 4th drop in the last 6 months. We’ve seen temporary dips before and it could be similar, but as finding a home to buy remains a major hurdle for buyers, we’re watching this metric closely.
  • Why is finding a home such a challenge? My colleagues have looked at the evolution of construction versus household growth and their findings are revealing. Construction of single-family homes has lagged behind household formation of more than 5 million over the past decade. OWhile recently slowed household formation and strong construction have started to close the gap, we would need completions to double and household formation to stay close to this recent slowdown to close the gap in 5-6 years.
  • Details and our housing data can be found for download at realtor.com/research. And you can also follow us on Twitter for real-time updates.

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