The economy remains on track as we head into the closing months of 2024, with inflation subsiding under the Federal Reserve’s tight management and employment remaining surprisingly resilient, though softening in recent months.
On the real estate front, high interest rates and low inventory have stymied the industry, with new single-family home sales plunging 11.3% in May and existing sales falling to an annualized rate of 3.89 million in June, a two-month period that normally sees accelerated buying trends.
The hoped-for rate cuts by the Federal Reserve that might have given the market a boost in the coming months have not materialized, with Treasury Secretary Jerome Powell announcing on July 31 that the federal funds rate would stay put at 5.25-5.5% for the near term, while holding out hope that there may be some downward movement before years’ end.
“FOMC participants wrote down their individual assessments of an appropriate path for the federal funds rate, based on what each participant judges to be the most likely scenario going forward,” Powell said in his report. “If the economy evolves as expected, the median participant projects that the appropriate level of the federal funds rate will be 5.1% at the end of this year, 4.1% at the end of 2025, and 3.1% at the end of 2026. But these projections are not a Committee plan or any kind of a decision.”
In his comments, Powell acknowledged that while the Fed is not yet confident enough to pull back from their efforts to control inflation, reducing policy restraint too late or too little could have an undue negative impact on economic activity and employment. That fear seemed to come to fruition when the July jobs report came in weaker than expected, sending Wall Street into a tailspin on August 2nd as fears of recession escalated in the financial community. However, markets have largely recovered since that drop.
In a reaction to the U.S. Commerce Department report on Q2 GDP, MBA SVP and Chief Economist Mike Fratantoni acknowledged several components in the report indicating a potential slowdown for the economy but also pointed to positive signs in the recent inflation data that he hoped “would provide enough confidence for the Federal Reserve to cut rates in September.”
While that remains to be seen, consumer confidence, interest rates, home sales, and new home construction remain in limbo, subduing hopes for any substantial real estate boost this year.
Consumer confidence shows signs of improvement
Dana M. Peterson, Chief Economist at The Conference Board, said that consumer confidence increased in July but remained in a narrow range that has prevailed over the past two years. “Even though consumers remain relatively positive about the labor market, they still appear to be concerned about rising prices and interest rates, and uncertainty about the future; things that may not improve until next year,” she said.
Interest rates staying put
It remains to be seen if a slowing economy will kickstart a movement towards lowering fed funds rates in the near term, but interest rates have remained in the sub-7% range this summer after reaching 8.5% in October 2023. According to the Freddie Mac economists’ July outlook, interest rates are expected to stay above 6.5% through the end of the year. Fannie Mae is also forecasting interest rates to remain at 6.8% through the end of the year, falling back only slightly to 6.4% in 2025, leaving little hope for the recovery that was so optimistically anticipated at the outset of the year.
Home price growth could pull back
According to the July 2024 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group, home price growth in the second quarter was stronger than previously anticipated but will likely moderate soon, closing 2024 and 2025 at annual rates of 6.1% and 3.0%, respectively. The CoreLogic HPI Forecast concurs, indicating in its July report that home prices are expected to rise only 3% on a year-over-year basis from May 2024 to May 2025.
New home sales soften, existing home sales improve slightly
According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes in June fell 0.6% to a 617,000 seasonally adjusted annual rate from a slight upwardly revised reading in May. The pace of new home sales is down 7.4% from a year earlier.
Jing Fu, NAHB director of forecasting and analysis, reported in July that new home inventory in June remained elevated at a 9.3 months’ supply.
“At the current building pace, there is still a long-run need for more construction because existing inventory remains relatively low,” he said. “Due to a lack of resale homes for sale, the combined inventory for new and existing single-family homes remains lean at a 4.7 months’ supply, according to NAHB estimates.”
After a lackluster May and June, pending home sales rose 4.8% in June, according to the National Association of Realtors, but the numbers remain low compared to past years.
Broader outlook murky
Across the board, economic and housing forecasts remain tentative and conservative, as economists keep an eye on a host of uncertain elements, including the volatility of the global economy, the Federal Reserve’s tight fiscal policy, a jittery stock market, and an era of consumer pessimism. However, should the Federal Reserve begin interest rate cuts in September as hoped for, many of these issues could ease considerably, opening the door for a more promising final quarter.
The overall economy is expected to fare well in 2024 according to experts from across the spectrum, but the dramatic drop seen in real estate sales, coupled with a virtually non-existent refinance market, will likely keep title orders depressed.
The macro-economic picture has certainly brightened in recent months as an anticipated recession failed to materialize in 2023. Now forecasters are increasingly calling for a “soft landing” in 2024. Goldman Sachs is especially optimistic, projecting U.S. GDP growth to hit 2.1% in 2024 compared to other economists who see growth in the 1-1.8% range for the year.
“It was fair to wonder last year whether labor market overheating and an at times unsettling high inflation mindset could be reversed painlessly,” said David Mericle, Goldman Sachs Research chief US economist, in a recent economic report. “But these problems now look largely solved, the conditions for inflation to return to target are in place, and the heaviest blows from monetary and fiscal tightening are well behind us.”
Joe Brusuelas, chief economist for RSM, a global network of independent assurance, tax and consulting firms, sees a slow first quarter for GDP, followed by an uptick to 1.8% in the second half of 2024 and accelerating into 2025.
“We expect that policy tailwinds from both the fiscal and monetary authorities will set the stage for strong productivity and growth in the years ahead as inflation eases back to a much more tolerable range,” Brusuelas said in his 2024 outlook report in the December edition of The Real Economy.
While all indications point to economic fundamentals being strong enough to keep the overall U.S. economy on stable ground in 2024, real estate sales are likely to remain stagnant due to low consumer confidence, high interest rates and lack of inventory. The refinance market will be in the same boat, as current mortgage holders will likely be unwilling to relinquish their low interest rates.
Consumer confidence
Viewed through a consumer lens, The Conference Board remains pessimistic, noting in its November forecast that the economy is likely to buckle early in the year, leading to a short and shallow recession.
“This outlook is associated with numerous factors, including elevated inflation, high interest rates, dissipating pandemic savings, rising consumer debt, and the resumption of mandatory student loan repayments,” they noted. “We forecast that real GDP will grow by 2.4% in 2023, and then fall to 0.8% in 2024.”
On the upside, consumer confidence was up 2.9% in November after three months of decline. The Conference Board Measure of CEO Confidence, however, fell to 46 in Q4 2023, down from 48 in the third quarter, as most business leaders are also anticipating a mild recession in early 2024.
Interest rates keep real estate in deep freeze
With interest rates hovering near 7% as we begin the New Year, prospective homebuyers will continue to face a double conundrum in 2024:
High interest rates have put many listed properties in the unaffordable range; and
Fewer homes are coming on the market as homeowners with low rates are staying put.
Some relief is on the horizon as homebuilders remain cautiously in the market to fill the supply gap. Many regions of the country are reporting strong new home sales, as homebuyers ready and willing to invest drift away from the paltry supply of existing homes to the new home market.
Freddie Mac statistics support this idea, with the GSE reporting that existing home sales were at their lowest level in 13 years in the month of September, but new home sales were showing remarkable resilience.
“New home sales have taken on increased importance for the housing market as the share of total home sales that are new increased to 16.1%, the highest share since 2005,” Freddie Mac reported. “The U.S. Census Bureau and U.S. Department of Housing and Urban Development reported that new home sales in September 2023 were at an annualized rate of 759,000, up 12.3% from August and 33.9% from September 2022. Overall, the inventory of new homes for sale has decreased 5.4% from last year.”
One nugget of encouragement came following the December FOMC meeting when the Federal Reserve signaled the possibility of interest rate cuts in 2024. However, any cuts are likely to have only a marginal impact on home sales in 2024, as these cuts will come in small increments through the course of the year. Moreover, rate cuts are far from assured, as Federal Reserve Chairman Jerome Powell said in his remarks in December that interest rate increases are unlikely, but not off the table.
“If the economy evolves as projected, the median participant projects that the appropriate level of the federal funds rate will be 4.6 percent at the end of 2024, 3.6% at the end of 2025, and 2.9% at the end of 2026, still above the median longer-term rate,” Powell said. “These projections are not a Committee decision or plan; if the economy does not evolve as projected, the path for policy will adjust as appropriate to foster our maximum employment and price stability goals.”
Navigating the market
Interest rates, while high, are not in uncharted territory and homebuyers in the past have learned how to navigate higher interest rates through a plethora of tactics.
Real estate agents and loan officers who are knowledgeable and consultative with their customers may find a way forward by assisting their prospective homebuyers with a range of options, such as:
Moderating expectations towards more affordable homes
Encouraging buyers to increase downpayments to lower their monthly payments
Educating borrowers about alternative products such as adjustable-rate mortgages
Negotiating seller concessions
Working with homebuilders to moderate costs in new home construction
Of course, none of these approaches mitigates supply constraints. Luring home sellers who are locked into mortgages in the 3-4% range back into the market is going to continue to be a challenge until overall rates begin to moderate.
Keeping an eye on fundamentals
As we enter 2024, mortgage, real estate and title professionals will have their eyes on some additional key economic fundamentals − both nationally and locally − as they navigate the slow market.
Job market
Although the job market has slowed in recent months, the outlook remains strong for stable employment in 2024, with some anticipation of a modest increase in unemployment. Regional variations are likely to have some impact on the real estate outlook in specific markets.
Consumer spending
According to Goldman Sachs, real disposable income is forecast to grow nearly 3% in 2024. Solid job growth, real wage growth and an increase in interest income could keep consumer spending strong. However, forecasters with the US Chamber of Commerce report that consumers are increasingly depleting their pandemic savings and increasing credit card debt to support a faster pace of spending.
Business investment
High interest rates that are hampering the real estate market are also likely to weigh on business investment in 2024. However, if recessionary fears continue to abate, this may increasingly become a non-issue in 2024.
Final thoughts
If interest rates begin to moderate in the latter part of 2024, real estate sales could improve. In fact, there’s evidence that Millennials who have delayed household formations and homeownership could, at some point, represent a source of pent−up market demand. However, the specter of even a mild recession coupled with diminished consumer savings so necessary for a downpayment, growing credit card debt, lack of affordable housing, and high interest rates could delay a real estate market comeback well into 2025, especially for first-time homebuyers.
From global economic trends to local housing affordability, numerous factors promise to shape the real estate market heading into the final quarter of the year. In general, the economic outlook both globally and within the U.S. remains subdued as we approach 2024, with many forecasters highlighting inflation and monetary policy as the drivers.
The Conference Board has predicted global GDP to grow by 2.9 percent in 2023, slowing to 2.5 percent in 2024. Emerging economies are expected to fare better than the U.S. and Europe, which are both anticipating lackluster performances once all is said and done this year. Although the U.S. economy has been surprisingly resilient in the aftermath of the pandemic, boasting strong employment numbers and healthy consumer spending, the Conference Board is anticipating a short and shallow recession in 2024, largely due to high interest rates, ongoing inflation, mounting consumer debt and dissipated consumer savings.
All of these factors are likely to prey on the housing market as well, and may serve to keep new homebuyers out of a market that has become increasingly unaffordable due to escalating interest rates and stubbornly limited inventory, which has kept prices elevated.
Chilly Q4 housing market
The housing market typically slows in the fourth quarter as buyers step away amid the approaching holidays. However, many industry pundits are predicting housing sales to slow faster than in years past due to the plethora of economic challenges homebuyers are facing.
In its September outlook report, Fannie Mae noted that mortgage origination activity had slowed to levels not seen since 2011.
“The new home market, which showed surprising strength over the first half of 2023, due in part to a limited inventory of existing homes for sale, may now be taking a breather,” Fannie Mae reported. “We forecast total home sales to be around 4.8 million in 2023, which would be the slowest annual pace since 2011 and 4.9 million in 2024. Similarly, our expectation for 2023 mortgage originations was downgraded from $1.60 trillion to $1.56 trillion in 2023 and from $1.92 trillion to $1.88 trillion in 2024.”
Further exacerbating the situation, some buyers are sitting out due to fears that housing has become overvalued and are hesitant to buy a home that may lose its value, if the market should take a sudden downturn. This is a regional reality, however. While the run-up in prices over the past few years in several western cities is ripe for a correction, many markets across much of the country increased at a moderate and sustainable pace, boding well for price stability.
New home sales decline
Despite builder concessions to offset high interest rates, new home sales continued to drop as the summer waned.
Sales of newly built, single-family homes in August fell 8.7% to a 675,000 seasonally adjusted annual rate, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“Builders continue to grapple with supply-side concerns in a market with poor levels of housing affordability,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala. “Higher interest rates price out demand, as seen in August, but also increase the cost of financing for builder and developer loans, adding another hurdle for building.”
As a result of all of these factors, builder confidence in the market for newly built single-family homes in September fell five points to 40, according to NAHB.
Consumer confidence mixed
With employment numbers on solid ground to date, consumers generally express optimism not only about their own jobs, but about available prospects in the larger market.
On the downside, the Conference Board noted in September that overall consumer confidence fell for the second month in a row in September with consumers expressing concern about rising prices, the volatile political situation and rising interest rates.
Interest rates: The wrench in the gears
Recognizing that the ongoing interest rate hikes are paralyzing the market, NAHB, the Mortgage Bankers Association (MBA) and National Association of REALTORS (NAR) joined forces in October to ask the Federal Reserve to refrain from further rate hikes.
In their October 10 letter to the Fed, the organizations pointed out that a primary source of inflation has been housing, highlighting that in July alone, shelter inflation was responsible for 90% of the gain for consumer prices.
Rather than exacerbating the problem with higher interest rates, the organizations suggested the federal government should be focused on facilitating the construction of affordable housing.
“Sustained, widespread or further increases in interest rates make this economic goal more challenging by limiting lot development and home construction, exacerbating housing supply, and pricing out millions of households from the goal of homeownership,” the letter said.
In September, MBA SVP and Chief Economist Mike Fratantoni acknowledged that the FOMC is still considering further rate hikes and in addition signaled that much-anticipated rate cuts would come later and slower than anticipated in 2024. But he remained optimistic that 2024 would see a turnaround.
“We expect that inflation will continue to drop closer to the Fed’s target, the job market will continue to slow, and that mortgage rates should begin to reflect that the Fed’s moves in 2024 will be cuts – not further increases,” Fratantoni said in his commentary. “This should provide some relief in terms of better affordability for potential homebuyers.”
Affordability
Limited affordable housing continues to plague the market overall. In part, homebuilders have begun to scale back the size and scope of amenities in their new builds to try to address the immediate issue of rising interest rates, but those efforts do not address the wider issue that can only be resolved by a concerted effort to address the problem on both the national and community level.
Affordable housing advocates offer several pathways to improved inventory, including incentivizing builders to build more affordable housing, increasing production of manufactured housing, addressing zoning and other restrictions that are preventing the creation of affordable housing where it is most needed, expanding the National Housing Trust Fund, and increasing resources for Federal affordable housing programs. The continued strength of the economy overall bodes well for a brighter 2024 for the housing market. However, the pace of recovery hinges on the FOMC effectively meeting its target to curb inflation, allowing interest rates to retreat. Concurrently, industry groups, local communities, and the federal government must tackle the pressing issue of housing affordability.
Forecasters Remain Cautious Given Inflation, Interest Rate Uncertainty
The real estate market has cooled over the past quarter, as buyers face mounting economic pressure from inflation, bloated housing prices, and escalating interest rates. But the question in most forecasters’ minds is what will happen in 2023 with inflation and interest rate projections in – as yet – unknowable territory.
Although experts are all over the map when it comes to predicting interest rates – projections for 2023 are currently ranging from 5% to 9% – everyone agrees that it largely depends on the Consumer Price Index and the Federal Reserve’s interest rate decisions that result from that data.
Economic predictions are often based on “the way it happened in the past,” but economic fundamentals are rarely exactly the same mix as in the past. Such is the case today, where economic fundamentals are largely stable and housing inventory remains tight – a promising recipe for a decent, albeit softer, purchase market in 2023.
Rodney Anderson, Executive Vice President, National Agency Manager with Alliant National, noted on a recent October Research webinar that while we are currently experiencing a slowdown in the market, it’s difficult to say what portion of that is seasonal and how much is interest rate-related.
“We’ve had a sellers’ market for a long time, and now, we are returning to equilibrium,” he said. “But if you look at the number of houses on the market, we are still in a sellers’ market, with a lot of regions experiencing only a 3-months’ supply, so there is continued support for prices to remain fairly stable.”
Although there remain a lot of unknowns, many economic forecasters retain a sense of cautious optimism based on what we do know, while lenders and real estate professionals are facing the reality of lower sales and originations in 2023.
Key Factors: CPI and FOMC
The Federal Reserve’s battle against inflation remains one of the key factors in the overall economic outlook for next year, as well as the outlook for the real estate markets, since with each incremental rise in the interest rates, a new segment of buyers will be priced out of the market.
The Federal Reserve has maintained a hard line with regard to inflation, and Federal Reserve Chairman Jerome Powell did not soften his tone during his Dec. 14 presentation following the December meeting of the FOMC, where he announced the Fed would be raising the interest rate another half percent.
“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” Powell said at the outset of his speech. “Without price stability, the economy does not work for anyone and without price stability we will not achieve a sustained period of strong labor market conditions that benefit all.”
In addition, Powell said he anticipated that “ongoing increases would be appropriate in order to attain a stance of market stability that is sufficiently restrictive to return inflation to 2% over time.”
One positive indicator in December was the Consumer Price Index, which showed inflation had slowed to 7.1%. While that stat was encouraging, Powell said it was not enough to deter further interest rate hikes.
“It will take substantially more evidence to provide confidence that inflation is on a sustained downward path,” he said.
With the target federal funds rate range now at 4.25-4.5% and Powell suggesting further hikes, it is now anticipated that the federal funds rate could rise to 5.5% in 2023, adding some further deterioration to the pool of potential buyers.
Federal Reserve reports stable economic activity
The Federal Reserve’s Nov. 30 release reported economic activity was flat or up slightly across most of the districts, a sign that the economy continues to hold its own despite the known headwinds of inflation, high interest rates and global issues.
Reports across sectors were uneven. Not surprisingly, lending, home sales, apartment leasing and construction all exhibited slowing trends while improving inventory in the auto industry has resulted in an increase in sales in some districts. In addition, spending was up in travel and tourism, and as well as in restaurants and hospitality. Manufacturing was also up slightly on average.
Employment numbers remain steady
Total nonfarm payroll employment increased by 263,000 in November, and the unemployment rate was unchanged at 3.7%, according to the Dec. 2 release from the U.S. Bureau of Labor Statistics. Notable job gains occurred in leisure and hospitality, health care, and government. Employment declined in retail trade and in transportation and warehousing.
Consumer confidence concerns were largely allayed by record Black Friday and Cyber Monday spending. Although inflation has taken its toll on consumers, low unemployment has kept spending steady across many sectors, including mortgage and rent payments, a factor that is keeping foreclosures contained.
Employment is also a major factor in keeping foreclosures down, and while labor demand is weakening, according to the Federal Reserve, businesses are expressing a reluctance to lay off due to hiring difficulties. Most importantly, most districts reported a fairly positive outlook, pointing to stable or slowing employment growth and at least modest further wage growth moving forward.
Real estate and lending projections
While the economy overall appears to be stable, the real estate market continues to decelerate.
According to the National Association Realtors (NAR) Nov. 30 report, pending home sales slid for the fifth consecutive month in October, falling 4.6%. Three of four U.S. regions recorded month-over-month decreases, and all four regions recorded year-over-year declines in transactions.
While there are always seasonal declines in the fall, the year-over-year number was more dramatic, with pending transactions down 37%.
“October was a difficult month for home buyers as they faced 20-year-high mortgage rates,” said NAR Chief Economist Lawrence Yun. “The West region, in particular, suffered from the combination of high interest rates and expensive home prices. Only the Midwest squeaked out a gain.”
On the upside, Yun was hopeful that the upcoming months will see buyers returning to the market if mortgage rates moderate, as they have in the past few weeks.
Taking a hard look at the numbers, Freddie Mac, in its most recent analysis, noted that home sales have fallen to a forecasted 5.4 million units at a seasonally adjusted annual rate in the third quarter of 2022 from 7 million earlier this year. The GSE forecasts that home sales activity will bottom at around 5 million units at the end of 2023.
“We expect house prices to decline modestly, but the downside risks are elevated,” Freddie Mac noted. “As the labor market cools off, housing demand will remain weak in 2023, potentially resulting in declines in prices next year. However, home price forecast uncertainty is wide due to interest rate volatility and the potential of a recession on the horizon.”
Freddie Mac predictions include:
Overall originations are expected to hit $2.6 trillion in 2022 and slow to $1.9 trillion in 2023
Mortgage originations will end the year at $1.9 trillion and slow to $1.6 trillion
Refinance originations slowed to $747 billion and will deteriorate to $310 billion in 2023
The Wild Card: Consumer confidence
Data can certainly tell us a lot, but at the end of the day, consumer experience and assessments can impact the long-range reality, and consumer confidence is decreasing, according to the Conference Board Consumer Confidence Index.
While not dramatic, the index backtracked to 100.2 from 102.2 in October. In addition, consumers assessment of the current conditions decreased to 137.4 from 138.7 last month, and consumers’ short-term outlook declined to 75.4 from 77.9.
Consumer confidence can keep the economy and the real estate market moving forward, while hubris can take us into unsustainable territory, as we learned in 2008. A little reality check may not be a bad thing as we all continue to keep tabs on the data and plan for a softer market in 2023.
An abnormally hot real estate market fed by low interest rates and the unexpected burst of buying during the COVID-inspired escape from the city may be finally cooling down in response to rising interest rates, inflation and a skittish Wall Street.
While real estate is taking a direct hit from rising interest rates, inflation is also reducing potential homebuyers’ buying power, especially in the low to mid-range properties. But there are a few upsides that could help us weather the storm.
The team at Alliant National has compiled information on the data points that will most impact the real estate market in Q4.
Inflation and Supply Chain
Two of the biggest challenges in 2022 are likely to persist through the end of the year and into 2023, inflation and supply chain disruptions. Additionally, the war in Ukraine has resulted in Russian energy supplies being cut off to Europe and economic pressures triggering inflation, the rise in interest rates, and potential recessionary trends are creating a confluence of uncertainty.
Concerning current economic trends, the September edition of the Federal Reserve’s Beige Book, indicated that economic activity was unchanged, since their July report, with five Districts reporting slight to modest growth in activity and five others reporting slight to modest softening. However, the report also noted that the outlook for future economic growth remained generally weak, with districts noting expectations for further softening of demand over the next six to 12 months.
Market Fundamentals Remain Steady
Despite deteriorating conditions for some home buyers, steady employment numbers should keep real estate moving through the end of 2022. Although the number of buyers competing for each property has decreased in the last few months, homes are still turning over relatively quickly and, in most regions, are sold at the asking price or more.
Continued tight inventory is expected to keep most markets competitive through the final quarter.
While there is no doubt that the real estate market is likely to continue to slow, especially if the Federal Reserve follows through on yet another rate hike, economists remain watchful of other indicators that could bode well for softening the impact.
According to Fannie Mae’s most recent release, GDP is projected to grow 1.3% in the third quarter of this year, followed by 0.7% growth in the fourth quarter.
However, most economists agree that consumers have been far more unpredictable in recent years and better than predicted GDP growth in Q4 could mitigate some of the other headwinds.
Home equity, another positive indicator for the housing market, has increased dramatically over the past decade. The value of homeowner equity in the United States increased from approximately $8.77 trillion in 2010 to approximately $21.1 trillion in 2020, according to TransUnion. CoreLogic reported recently that homeowners gained another $3.6 trillion from 2021 to 2022 as home values continued to escalate, providing some solid financial strength to help homeowners weather a potential downturn.
First-Time Homebuyer Numbers Dropping
During an October Research webinar in September, Selma Hepp, Executive, Research & Insights Interim Lead of the Office of the Chief Economist for CoreLogic noted that the real estate market is experiencing its biggest hit from first-time homebuyers, who are increasingly squeezed out of the market by the trifecta of higher prices, higher interest rates and inflation that is pricing them out of the market.
In spite of that reality, first-time homebuyers, though making up a smaller percentage of homebuyers in recent months, did bump up their participation in August.
Part of that continued interest could be that many buyers are still finding buying more appealing than renting in markets where rents have escalated faster than monthly mortgage payments in recent years. That reality combined with increasing wages in some sectors is helping offset the trifecta.
Strong Employment Outlook Encouraging
U.S. employment numbers have remained strong through the summer, with the economy adding 293,000 jobs In June, 526,000 in July, 315,000 in August, and 263,000 in September, in spite of recession concerns that predicted otherwise. There are 2.0 job openings for every unemployed person, so the demand for labor is strong and should remain so through Q4, though job openings appeared to be on the decline in October.
In mid-September, the Q4 ManpowerGroup Employment Outlook Survey (NYSE: MAN) indicated that the global labor market was likely to remain strong with steady hiring expected to continue through the remainder of 2022.
ManpowerGroup Chairman and CEO Jonas Prising reported the need for technology talent along with the growth of employment opportunities in finance, banking, and insurance are keeping the labor market strong, especially in the U.S. This along with the fact that the U.S. labor force participation grew to 62.4% in August bodes well for the real estate market as we finish out 2022.
While employment remains strong, the Conference Board Economic Forecast for the U.S. Economy, released on Sept. 14, forecasts 2023 GDP growth will slow to 0.3% year-over-year.
