Jeff Cox of CNBC reports on the latest jobs numbers, highlighting that the U.S. economy added 254,000 jobs in September, significantly surpassing expectations and reflecting a strong labor market as the unemployment rate fell to 4.1%. Upward revisions for August and July further bolstered the job growth picture, while average hourly earnings rose 0.4% for the month, up 4% year-over-year. According to Cox, the robust employment data suggests the Federal Reserve may adopt a more gradual approach to interest rate reductions.

Source: CNBC (October 2024)

“It was ‘wow’ across the board, much stronger than expected…The bottom line is it was a very good report. You get upward revisions and it tells you the job market continues to be healthy, and that means the economy is healthy.”

Breck Dumas of FOX Business reports that the former U.S. Treasury Secretary Larry Summers criticized the Federal Reserve’s recent half-point rate cut, calling it a “mistake” in light of the stronger-than-expected September jobs report. Summers argued that adding 254,000 jobs, far exceeding predictions, indicates that the economy is in a “high neutral rate environment” and suggests that more cautious monetary policy is needed. He emphasized that wage growth remains elevated and warned that both “no landing” and “hard landing” scenarios are now risks for the Fed to consider.

Logan Mohtashami of HousingWire comments on the data, noting that the jobs report has confirmed that the labor market remains resilient. Despite the Federal Reserve’s 0.50% rate cut, the 10-year yield has risen by over 35 basis points, driven by better-than-expected economic data across retail, housing, and industrial production sectors. Although the labor market is softening slightly, it’s not breaking, and mortgage rates have likely bottomed for 2024.

Fannie Mae released a statement on the data, stating there are easing concerns about a rapidly slowing labor market after unemployment reached 4.3% in July. Wage growth remains elevated, but recent inflation reports suggest it’s not driving excessive price increases. Markets now anticipate a smaller 25-basis point rate cut in November, aligning with expectations. Despite struggles in manufacturing, the rise in services and car sales points to continued strength in the broader economy.

Home shrinkflation

Joel Berner of Realtor.com reports on the declining size of newly built homes in America. Specifically, the median size of new homes has decreased to 1,965 square feet in 2024, down from 2,128 square feet in 2022, while existing homes have seen a slight increase in size. This trend has led to a decline in new home listing prices, which dropped to $450,000 in August, down from the peak of $470,000 in 2022. Builders are focusing on smaller, more affordable homes to meet the demand, helping to stabilize prices in the current high-interest rate environment.

Keeping Current Matters reports on this trend: “Why would builders want to build smaller homes right now? At the end of the day, builders are going to focus on building homes that meet current market demand – because they want to build what they know will sell. And the number one thing homebuyers are looking for right now is better affordability. Since smaller homes typically come with smaller price tags, both buyers and builders have shifted their focus to homes with less square footage.”

Source: KCM (October 2024)

Giulia Carbonaro of Newsweek reports on the ‘housing shrinkflation’ trend, noting that homebuyers, particularly in the South, face “shrinkflation” as homes become smaller and more expensive. A USA Today/Homefront analysis found that the median U.S. home is now 128 square feet smaller than five years ago, yet costs $125,000 more. This trend is driven by inflation, rising construction costs, and the affordability crisis. Builders are shrinking home sizes to keep prices somewhat accessible. In cities like Colorado Springs, homes are 22% smaller than in 2019 but cost 50% more per square foot, reflecting how economic pressures are reshaping the housing market.

Lance Lambert of Realtor.com reports on this topic, noting that as prices increase, builders like D.R. Horton are reducing both home sizes and prices, with the median size of new construction homes dropping from 2,098 square feet in 2022 to 2,036 square feet in 2023. Beyond affordability, shifting demographics—such as smaller household sizes due to delayed marriages, fewer children, and longer life spans—influence this trend. Builders are betting buyers will trade square footage for affordable access to metro areas.

Source: Realtor.com (October 2024)

“Household size has been shrinking for years, partly due to younger generations delaying or skipping marriage, having fewer children, and a declining birth rate. Additionally, medical advances have extended life spans, increasing the number of years Americans spend in old age, when household sizes are usually smaller.”

Walz-Vance debate

Julia Ingram of CBS News reports on last week’s VP debate, in which housing was mentioned several times. Democratic candidate Gov. Tim Walz mentioned “house” or “home” 28 times, focusing on housing affordability and the Biden administration’s efforts to address the issue. Republican Sen. JD Vance mentioned these terms 26 times, emphasizing the high costs under the current administration. The discussion reflected broader concerns about housing supply and affordability, a significant issue in the U.S.

Source: CBS News (October 2024)

Chris Clowe of HousingWire reports on this topic, highlighting that Walz emphasized the need for downpayment assistance, comparing it to veterans’ home loans, and highlighted his $3 billion housing investment as governor. He noted the importance of cutting red tape and local efforts to boost housing supply, citing a 12% increase in housing stock in Minneapolis. Vance, the Republican senator from Ohio, criticized institutional investors in housing and discussed immigration’s impact on housing costs, reflecting the ideological divide between the two candidates.

Keith Griffith of Realtor.com notes that Vance argued that millions of undocumented immigrants were competing with Americans for homes, driving up prices, and advocated for building on federal lands. In defending Vice President Harris’s housing plan, Walz emphasized downpayment assistance and criticized Wall Street speculators for commodifying housing, a similar criticism to Vance.

“Vance, who has also called for a crackdown on institutional investor homebuyers, conceded that some of the plans mentioned by Walz were “halfway decent.” But he noted that he disagreed on many points, and questioned why the housing policies proposed by Harris hadn’t already been enacted under President Joe Biden.”