July 5, 2023 | Driving It Home with ABoR's Housing Economist

Despite broader macroeconomic lags—including decelerating, albeit still-high inflation, tighter monetary policy, and recent stress in the regional banking system and dampened bank lending, the U.S. economy remained resilient over the first half of 2023. A robust labor market and strong consumer spending helped mitigate the effect of those lags, but also contributed to the Federal Reserve’s continued rate hikes, with at least one additional rate hike likely penciled in for the July meeting (i.e., the Fed funds rate will be “higher for longer”). Despite the ongoing potential for a recession—the occurrence of which will largely depend on the response of the U.S. economy to monetary policy, the magnitude of the recession appears to be lower. In other words, should a recession occur, it will likely be a milder recession than previously anticipated. On a week-over-week basis, activity in the Austin housing market accelerated ahead of the July 4 holiday as buyers opted to close on their homes before the long weekend. Closed sales ticked up nearly 48%, while active and new listings increased nearly 8% and 7%, respectively. Pending sales were up slightly (~2%), but activity in the Austin housing market will likely dampen this week due to the loss of a business day. Overall, activity in the Austin housing market tends to be more volatile during the summer months as folks head off for vacation, and the Memorial Day, Juneteenth, July 4, and Labor Day holidays prompt a loss in business days. Stay tuned for the release of the June housing stats coming next week, which will provide deeper insights into current conditions in the Austin housing market. Don't forget that Dr. Losey will present the Buy vs. Rent Index at the upcoming Central Texas Housing Summit on July 26. Don't miss it–save your spot here: https://www.abor.com/event-type/central-texas-housing-summit Download the Audio Transcript + Episode Summary: https://www.abor.com/content/uploads/2023/07/DIH-7-5-2023.pdf Connect with us on socials: https://www.abor.com/socials Connect with Dr. Clare Losey on LinkedIn: https://www.linkedin.com/in/clare-losey