Podcasts Business Investing Real Estate News: Real Estate Investing Podcast The Real Estate News Brief: Loan Rates Hit Home Prices, Rent Growth Slows, Lumber Prices Retreat

The Real Estate News Brief: Loan Rates Hit Home Prices, Rent Growth Slows, Lumber Prices Retreat

Published: Jan. 11, 2023, 12:45 a.m.

b'

In this Real Estate News Brief for the week ending January 7th, 2023... home loan rates are hitting home prices, rent growth slows on apartments and single-family rentals, and lumber prices have returned to pre-pandemic levels.
\\xa0
Hi, I\'m Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.
\\xa0
Economic News
\\xa0
We begin with economic news from this past week. Federal Reserve officials are seeing a long-term need for higher interest rates, according to the minutes of their last meeting. They raised the short-term rate by a half point at that meeting to a range of 4.25% to 4.50%. That\\u2019s after four three-quarter point rate hikes during past meetings. Minneapolis Fed President Neel Kashkari sees the federal funds rate going as high as 5.4%, or higher if inflation doesn\\u2019t settle back down. Their preferred inflation gauge showed a core rate of 4.7% in November, which is well above their target rate of 2%. (1)
\\xa0
At this point, the economy remains strong with a Q4 GDP of 3.9% and a job market that is running hotter than the Fed would like to see. Last week, unemployment applications fell to a 3-\\xbd month low of 204,000. As reported by MarketWatch, jobless claims were down in 30 of the 53 states and U.S. territories. Continuing claims were also lower by 24,000 to a total of 1.69 million. This kind of data shows that the economy continues to grow as the Fed raises rates to slow the economy and tamp down inflation. (2)
\\xa0
The latest report on job growth shows that U.S. companies added 223,000 jobs in December and the unemployment rate dipped from 3.6% to 3.5%. That\\u2019s more proof of economic growth, but the report also shows that wage growth is slowing down. As MarketWatch reports, hourly wage growth was only up .3% in December to an annual rate of 4.6%. That\\u2019s down from 4.8% last month. (3)
\\xa0
The latest report on job openings shows that they decreased slightly from October to November, to a total of 10.5 million. It also shows that workers are quitting in high numbers. Both are signs of a strong job market. (4)
\\xa0
We have a bit of housing market news. The National Association of Home Builders released its construction spending report for November which shows a .2% increase. That\\u2019s higher than a forecast by Wall Street analysts who expected a .4% drop. Private residential construction was down half a point while private non-residential spending was up almost two points. (5)
\\xa0
Mortgage Rates
\\xa0
Mortgage applications were down last week, as rates moved higher. Freddie Mac says the average 30-year fixed-rate mortgage was up 6 basis points to 6.48%. The 15-year was up 5 points to 5.73%. (6)
\\xa0
It\\u2019s been a roller coaster ride for mortgage rates. Rates were subsiding at the beginning of December, but they surged again during the second half of the month. According to the Mortgage Bankers Association, mortgage application volume was down 13.2% during the last two weeks of the year. For refinancing loans, there was a bigger drop of 16.3%. (7)
\\xa0
In other news making headlines...
\\xa0
High Loan Rates Hit Home Prices
\\xa0
Higher mortgage rates are taking a bite out of home price growth. According to CoreLogic data, annual home price growth dropped below 10% for the first time in almost two years. It was down 8.6% and is now 2.5% lower than it was last spring and falling. Analysts expect to see \\u201cnegative\\u201d home price growth sometime this spring, before it bounces back into the 2 to 3% range, next fall. (8)
\\xa0
The Sun Belt states are showing the highest home price growth, with Florida, South Carolina, and Georgia leading that list. Washington, D.C. is at the bottom, with a current year-over-year reading of 1.2%.
\\xa0
Rent Growth Declines Faster than Normal
\\xa0
Rent growth is also slowing down. Apartment List\\u2019s National Rent Report shows that apartment rent growth was down in December, for a fourth month in a row to an annual rate of 3.8%. That\\u2019s a far cry from the 17.6% rate of growth in 2021. (9)
\\xa0
Single-family rent growth is showing more strength. According to data from CoreLogic, single-family rents are still growing at an annual rate of 8.8%. That\\u2019s the lowest rate of appreciation we\\u2019ve seen in more than a year, but it\\u2019s also about three times higher than it was before the pandemic.
\\xa0
Lumber Prices Come Back to Earth
\\xa0
Lumber prices have finally come back down to earth. According to industry experts, they are now around $375 for 1,000 board feet of framing lumber. That\\u2019s cheaper than pre-pandemic levels of around $400, and much less than a pandemic peak of $1,733. (10)
\\xa0
Lumber prices are usually the highest in April and May so some of the price drop is due to the season. But the experts are not expecting to see another huge run-up in prices next Spring.
\\xa0
That\\u2019s it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review!
\\xa0
You can find out more about real estate investing as a member of RealWealth. It\\u2019s free to join at newsforinvestors.com.\\xa0
\\xa0
Thanks for listening. I\'m Kathy Fettke.
\\xa0
Links:
\\xa0
\\xa0
\\xa0
\\xa0
\\xa0
\\xa0
\\xa0
\\xa0
\\xa0
9 -\\xa0
\\xa0
'