May 9, 2023 | Driving It Home with ABoR's Housing Economist

Last week, the Federal Reserve raised the federal funds rate again - marking its tenth consecutive rate hike since March 2022. Ultimately, this increased the effective rate to hover between 5-5.25% which is the highest level pre-Great Recession. Although this seems like it could result in significant mortgage rate increases, the market has likely already priced in this anticipated change - meaning we shouldn't see a material rise in rates over the near term. Instead, we may experience a slight decline in mortgage rates due to the ongoing banking sector turmoil and decelerating inflation. While the job market is beginning to cool, it remains one of the most significant challenges for lowering inflation; the demand for workers continues to outpace its supply, placing upward pressure on wages. Although job openings are declining, they measure well-above pre-pandemic levels in an otherwise strong labor market. Here in Austin, we remain relatively strong! Our total private nonfarm job growth in March was 5.9%, while the rest of Texas had 4.6% and the U.S. had 2.4% YoY. As job growth increases, demand for housing naturally grows as well. Wage growth in Austin (4.9%) is higher than the nation's (4.4%). While mortgage rates remain a challenge, Austin's labor market is strong and will help mitigate the effects of higher mortgage rates. Download the Audio Transcript: https://www.abor.com/content/uploads/2023/05/DIH-5-9-2023-Transcript.pdf Connect with us on socials: https://www.abor.com/socials