Key Rate Indices

State of the Market

Below is a summary of some of the most important latest recent economic releases and information:

  • Single-Family Inventory Up: Altos reports that active single-family inventory was up 1.6% week-over-week. Inventory is now up 15.2% from the February bottom, and almost above the maximum for inventory last year. Inventory is still far below pre-pandemic levels.
  • Q2 GDP Estimate Increases per Atlanta Fed: The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2024 is 4.2 percent on May 8, up from 3.3 percent on May 2.
  • Mortgage Rates Hit Month Low: [5/9/2023] The most commonly quoted mortgage, the 30-year fixed-rate, technically hit the lowest levels in a month at 7.18% average.
  • Weekly Initial Unemployment Claims Increase to 231,000: As reported by the DOL, In the week ending May 4, the advance figure for seasonally adjusted initial claims was 231,000, an increase of 22,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 208,000 to 209,000.

U.S. Construction  Spending Unexpectedly Falls

The United States construction industry experienced an unexpected decline in spending during March 2024, with a 0.2% decrease, despite economists’ predictions of a 0.3% increase. This downturn was primarily driven by a reduction in private construction projects, which saw a 0.5% drop.

Within the private construction sector:

  • Residential construction saw the largest drop, with a 0.7% decline
  • Multifamily was not far behind, falling by 0.6%
  • Single-family home construction saw a 0.2% reduction

In contrast to the private sector, public construction projects witnessed growth, with an overall increase of 0.8%. This growth was driven by a 0.6% rise in spending by state and local governments, as well as a significant 3.6% surge in outlays on federal government projects.

The unexpected decline in construction spending, particularly in the private sector, raises concerns about the overall health of the U.S. economy and the construction industry’s recovery from the pandemic. The housing market, while showing some improvement, still faces challenges in meeting the demand for new homes, as supply remains constrained compared to pre-pandemic levels.

Employment Data Comes in Below Expectation, Shifts Fed Outlook

The latest employment data from the United States has fallen short of expectations, with the economy adding only 175,000 jobs in the most recent month, compared to the consensus forecast of 243,000. Despite this disappointing figure, it is important to note that the U.S. is still experiencing the fifth-longest continuous streak of employment growth in its history, albeit at the slowest pace in six months.

Below is a chart showing the top 10 longest positive employment growth streaks in the U.S.

The job numbers for February and March were revised downward by a total of 22,000, suggesting that the labor market may have been weaker than initially reported.

The unemployment rate also ticked up to 3.9%, indicating a slight loosening of the tight labor market conditions.

However, many are referring to April’s employment report as the “Goldilocks report”, because the job gains were relatively strong, but weak enough to possibly push the Fed towards more and earlier rate cuts. Funds futures now indicate that investors anticipate a rate cut in September, earlier than previously expected. Moreover, the market is now positioning for two rate cuts this year instead of just one, demonstrating the growing belief that the Fed will need to take more aggressive action to support the labor market and overall economic growth.

For more information, questions, or comments, please call or email.

Drew Daly

Development Director

C: (206) 228-6166

E: drew@dalypartners.net