Video: November 2023 Economic and Housing Market Update
The Realtor.com® economics teamvideo update gives you the relevant economic and real estate information you need to know to navigate the housing market as a homebuyer, home seller, or industry professional.
Favorable inflation and labor market data have helped bring mortgage rates back from 23-year highs. Mortgage rates remain higher than they were in September, but could kickstart the housing market in the first quarter if they remain lower.
Danielle discusses an opportunity for Active Duty Military & Veteran home shoppers that many are not aware of. Research from Economist Jiayi Xu shows that not only do VA loans offer a zero down payment option, they tend to have lower mortgage interest rates than similar conforming loans, a key advantage in today’s still-high-rate environment.
We kicked off November with a Fed meeting and no rate change. In the post-meeting press conference, Chair Powell noted that the committee was not yet confident that its policy stance was sufficiently restrictive. While another hike in December is on the table, it is possible, and even likely that incoming data will convince the Fed’s voting members that they have done enough. But the Fed is cautious, with Chair Powell noting at a mid-month event that “inflation has given us a few head fakes.”
After a September surge, the jobs market took a big step back in October with companies adding only half as many workers to payrolls. The unemployment rate ticked up slightly to 3.9%, which is still a historically low level.
Both job openings and quits were steady in September. In total, the job openings and labor turnover data (JOLTS) did not offer strong evidence of momentum in September, but the fundamentals still seem to favor job seekers over hiring firms. Jobless claims mirrored this trend, holding steady at a low level through November, suggesting a relatively favorable environment for workers.
Further, after a mixed late summer and fall, recent inflation data have improved. A dip in energy prices helped drive the annual headline Consumer Price Index (or CPI) down in October, and month to month consumer prices were flat. Importantly, Core CPI, which excludes food and energy prices, also dipped lower.
In October, housing data compiled by Sabrina Speianu pointed to a lot of stability vis a vis last year. Home prices were flat, homes sat just 1 day less on the market, while active listings and new listings were each just a few percent lower than in October 2022. The large gaps seen earlier in the year are closing.
One potential area of concern or opportunity was the share of listing price cuts. Reductions are rarer than one year ago, but like last fall, they’ve become more common than is typical for this time of year, which could signal slowing home prices ahead.
Nevertheless, a lack of options and high costs has kept the housing market surprisingly competitive. One impact of this is that down payments have been rising. In fact, research from Hannah Jones found that the average down payment was a record-high 14.7% in the third quarter, bringing the median down payment to $30,000. Regionally, metros in the South and West saw down payments shrink while Northeast metros where housing markets remain more competitive saw down payments grow.