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Economic Indicators

Single-family Housing Starts

Housing starts surged by 9.3% compared to the previous year, with single-family home construction experiencing a 42.2% increase. The dip in mortgage rates has contributed to a positive builder sentiment, potentially providing a boost to housing supply.

Housing Inventory

The inventory of existing homes persists at low levels amid mid-6% mortgage rates, maintaining the status quo of the lock-in effect as homeowners are reluctant to part with their low-rate mortgage contracts.

Mortgage Rate

Mortgage rates declined to 6.6% after the Fed indicated that it might cut rates three times in 2024. However, rates are expected to remain at the mid-six percent levels and this decline will not be substantial enough to bring forth a significant supply or ease affordability.

Inflation

CPI increased 3.4% y-o-y in Dec 2023, mainly due to housing costs, which rose 6.2% y-o-y. While inflation has cooled since hitting 9.1% in mid-2022, it remains above the 2% target level, suggesting that the Fed will hold rates higher for longer.

Unemployment Rate

Employers added 216,000 jobs in December 2023 and unemployment held steady at 3.7%, highlighting a steady labor market. However, most of the job gains were in health care, social assistance, and local and federal government.

Hourly Earnings

Average hourly earnings increased by 4.1% compared to a year ago. Even with interest rates at a two-decade high, resilience in employment has bolstered consumer spending and economic growth.

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