Weekly Real Estate Wrap Up & Week Ahead for September 1

Welcome to the Weekly Real Estate Wrap Up & Week Ahead, your go-to source for the latest updates and insights on the residential, commercial, multifamily, and mortgage markets. This week, we delve into the key factors influencing the real estate landscape, including mortgage rates, housing demand, and significant economic indicators. We also explore recent policy changes and economic updates from key government agencies that could impact the real estate markets.

Key Takeaways

• Mortgage Rates: Mortgage rates have dropped to their lowest level in over a year, providing a potential boost to the housing market.
• Housing Demand: Despite lower mortgage rates, housing demand remains weak, with total home sales at their lowest since July 2011.
• Commercial Market: Commercial and multifamily mortgage loan originations have increased, indicating a resilient market.
• Multifamily Market: The multifamily sector faces an oversupply of apartments, but fundamentals are improving.
• Economic Indicators: Key economic indicators, including GDP growth, labor market conditions, and inflation, are shaping the real estate market.

Residential Market

News and Developments:

• Mortgage Rates: Mortgage rates have fallen to their lowest level in more than a year, with the average 30-year fixed rate at 6.47% as of August 8, 2024. This decline is a positive sign for prospective home buyers and sellers in a challenging market NY Times. According to Mortgage News Daily, the average top-tier 30-year fixed mortgage rate is at its lowest level since April 2023, driven by softer inflation and economic data.
• Housing Demand: Despite the drop in mortgage rates, housing demand remains weak. Homebuyers are pausing as they wait for rates to decline further. Total home sales for June were at their lowest level since July 2011 Freddie Mac. The American Enterprise Institute (AEI) highlights that increased housing supply is essential to meet demand, especially in high-demand areas like New York City AEI.
• Economic Indicators: The key indicators this week include the August employment report, ISM manufacturing index, auto sales, and the Trade Deficit for July. The Federal Reserve Beige Book will provide insights into economic conditions across various districts Calculated Risk Blog.

Commercial Market

News and Developments:

• Mortgage Originations: Commercial and multifamily mortgage loan originations increased by 3% in Q2 2024 compared to a year ago, and increased 27% from the first quarter of 2024, according to the Mortgage Bankers Association (MBA). Jamie Woodwell, MBA's Head of Commercial Real Estate Research, noted that "most capital sources remain ready, willing, and able to lend on properties that can support a loan" MBA.
• Sector Performance: The self-storage sector is experiencing a slowdown due to rising supply and falling rents. The global self-storage development pipeline continues to be dynamic, with new projects being planned and approved regularly Inside Self-Storage.
• Commercial Real Estate Trends: JLL's latest report indicates that the commercial real estate market is showing resilience despite economic uncertainties. The report points to strong fundamentals in sectors like industrial and multifamily housing JLL.
• Commercial Real Estate Outlook: Cushman & Wakefield's latest updates highlight significant transactions and leases in the commercial real estate market. The firm also reports on the resilience of the industrial sector and the challenges faced by the office market Cushman & Wakefield.

Multifamily Market

News and Developments:

• Oversupply: The multifamily market is facing an oversupply of apartments, leading landlords to offer rewards and cash-back programs to attract and retain tenants. Despite elevated levels of new supply, multifamily market fundamentals, such as vacancy rates and rent growth, have improved during the first half of 2024 due to an increase in demand Fannie Mae.
• Construction Trends: New residential construction saw an uptick in June, with multifamily starts increasing by 10% month-over-month Freddie Mac.

Mortgage Market

News and Developments:

• Rate Trends: The average 30-year fixed mortgage rate was 6.48% as of August 28, 2024, down from 6.62% the previous week. Experts predict that rates will either stay the same or go down in the coming weeks Bankrate.
• Refinance Activity: Higher mortgage rates since 2022 have dampened refinance activity, with Q2 2024 refinance volume at its lowest since Q3 1996 Freddie Mac.
• Mortgage Market Trends: Mortgage News Daily reports that mortgage rates have been moving in a very narrow range with minimal changes from day to day. The average top-tier 30-year fixed mortgage rate is at its lowest level since April 2023, driven by softer inflation and economic data Mortgage News Daily.

Economic Indicators

Summary:

• Federal Reserve Policy: Federal Reserve Chair Jerome Powell indicated that interest rate cuts are on the horizon, though he declined to provide exact timing or extent. Powell emphasized that the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data and the evolving economic outlook CNBC. The Federal Reserve's anticipated rate cuts in September are expected to lower mortgage rates further, potentially boosting the housing market USA Today.
• GDP Growth: The U.S. economy showed a 2.8% annualized growth rate in Q2 2024, driven by consumption spending and non-residential investment. However, residential investment declined, marking the first drop after three quarters of growth Freddie Mac.
• Labor Market: The labor market is showing signs of cooling, with nonfarm payroll gains at 114,000 in July and the unemployment rate ticking up to 4.3% Freddie Mac.
• Inflation: Inflation is moderating towards the Federal Reserve's target, with the core Personal Consumption Expenditure (PCE) Price Index rising 2.6% year-over-year in June 2024 Freddie Mac.

Studies and Releases

Recent Studies:

• Urban Institute Report: A recent report from the Urban Institute, published on August 28, 2024, highlights the growing affordability crisis in urban areas. The study emphasizes the need for increased housing supply and policy interventions to address the affordability gap Urban Institute.
• Moody’s Analytics: Moody’s released a study on August 22, 2024, indicating that commercial real estate markets are showing resilience despite economic uncertainties. The report points to strong fundamentals in sectors like industrial and multifamily housing Moody's Analytics.
• ATTOM Data Solutions: ATTOM's latest report, published on August 14, 2024, reveals that foreclosure activity has increased by 5% month-over-month, signaling potential distress in the housing market. The report suggests that rising interest rates and economic uncertainties are contributing factors ATTOM Data Solutions.

Expected News This Week (September 1)

Economic Reports:

• Federal Reserve Beige Book: The Federal Reserve will release its Beige Book on September 6, 2024, providing insights into economic conditions across various districts. This report will be closely watched for indications of future monetary policy actions.
• Employment Report: The U.S. Bureau of Labor Statistics will release the August employment report on September 1, 2024. This report will provide critical data on job growth, unemployment rates, and wage trends, which could impact the real estate market.
• Consumer Confidence Index: The Conference Board will release the Consumer Confidence Index for August on September 5, 2024. This index measures consumer sentiment and can influence spending and investment decisions, including in the real estate market.

Earnings Releases:

• Lennar Corporation: One of the largest homebuilders in the U.S., Lennar Corporation, is scheduled to release its Q3 2024 earnings report on September 4, 2024. Investors will be looking for insights into the company's performance amid fluctuating mortgage rates and housing demand.
• Zillow Group: Zillow Group, a leading online real estate marketplace, will release its Q3 2024 earnings on September 5, 2024. The report will provide valuable information on the state of the online real estate market and consumer behavior.
• Realogy Holdings Corp: Realogy Holdings Corp, a global leader in residential real estate services, is set to release its Q3 2024 earnings on September 6, 2024. The company's performance will offer insights into the broader real estate services market.

Conclusion

The real estate market is currently influenced by a mix of economic factors, including mortgage rates, GDP growth, labor market conditions, and Federal Reserve policies. While there are signs of cooling in some areas, the anticipated rate cuts by the Federal Reserve could provide a much-needed boost to the market in the coming months. Stay tuned to the Weekly Real Estate Wrap Up & Week Ahead for the latest updates and insights.

Impact Capitol DC SitusAMC Mortgage Bankers Association The Mortgage Collaborative Mortgage Professional America National Mortgage News Inside Mortgage Finance Publications HousingWire National MI National Association of REALTORS? Federal Reserve Board Federal Reserve Bank of New York Federal Housing Finance Agency Federal Housing Administration and HUD Office of Housing Fannie Mae Freddie Mac The White House CNBC Yahoo Finance Fox Business Network