Key Rate Indices

State of the Market

Recent economic releases and data highlights:

Consumer Price Index (CPI): In June, the CPI climbed 3% annually, decelerating from May’s 3.3% rise and undercutting market expectations, while core CPI grew at a more modest 2.5% year-over-year rate, unchanged from May. [Source: Bureau of Labor Statistics]

Central Bank Balance Sheet: The Federal Reserve’s balance sheet contracted to $7.21 trillion as of July 17, 2024, down from $7.22 trillion the previous week, reflecting a continued trend of monetary tightening from its peak of $8.97 trillion in April 2022. [Source: Federal Reserve]

Jobless Claims: The latest US jobless claims data revealed a rise of 10,000 to 243,000 for the week ending July 13th, exceeding market forecasts and hitting a new weekly high, indicating a softening labor market that could prompt the Federal Reserve to consider interest rate cuts as early as September. [Source: Dept. of Labor]

Seattle Housing Market Update: Boom in Deliveries, Slowdown in Pipeline

In the second quarter of 2024, a remarkable 4,758 residential units were delivered in Seattle, contributing to a total of 8,140 units for the first half of the year.

This represents a substantial 95% year-over-year increase, indicating a surge in completed properties entering the market.

The graph below shows all types of residential units delivered in Seattle from 2018 to the second quarter of 2024.

Building Permit Applications:

Permit activity, however, tells a more complex story:

  • There has been a dramatic decline, with only 1,895 units applied for in the first half of 2024
  • This marks an 81% decrease from the peak of 9,926 units in the second half of 2020
  • Represents a 52% drop from the previous six-month period.

The sharp reduction in new project applications suggests a potential slowdown in future development pipelines.

Building Permit Issuance:

Conversely, permit issuance (shown below) has shown recent signs of recovery.

  • While the 3,533 units permitted in H1 2024 represent a 54% decrease from the peak of 7,775 units in H2 2021
  • It also indicates a 22% increase from the latter half of 2023.

This uptick in issued permits, despite being below historical highs, may signal a cautious resurgence in construction activity.

Key takeaways from these trends include:

  1. A significant influx of completed units entering the market
  2. A sharp decline in new project applications
  3. A recent increase in permit issuance, albeit still below peak levels

Total housing starts in June were above expectations, April and May numbers revised upward

The U.S. housing market showed mixed signals in June, with overall housing starts demonstrating some resilience despite ongoing challenges. Housing starts rose 3% to an annual pace of 1.35 million units, surpassing Wall Street expectations of 1.3 million.

A closer look at the data reveals diverging trends between single-family and multi-family construction.

Single-family housing starts decreased by 2.2% in June but showed a 5.4% year-over-year increase.

In contrast, multi-family starts surged by 22% for the month but experienced a significant 23.4% year-over-year decline.

This shift suggests a changing landscape in the housing market, with weakness moving from single-family to multi-family starts compared to the previous year and early 2023.

Building Permits:

Looking ahead, building permits, a key indicator of future construction activity, rose 3.4% to an annual rate of 1.45 million. However, this overall increase masks differing trends within housing types.

Single-family permits decreased by 2.3% from May, indicating potential headwinds for this segment.

Conversely, multifamily permits saw a substantial 19.2% increase from the previous month, suggesting a possible rebound in apartment and condominium construction.