New home lot supply drops to cycle lows
On Monday, the Dow Jones Industrial Average had its single largest one-day point drop ever. As of writing this, it seems the selloff has leveled out, but the question remains, what happened? It’s hard to pinpoint the exact catalyst of the correction, but the most obvious culprit is inflation (algorithmic trading has also been blamed). Although the 2.9% increase in wages from January’s employment report is great for consumers, it fuels inflation fears and corresponding worries that the Fed will need to raise short-term rates quicker than anticipated. The new Fed Chair, Jerome Powell, is expected to push three rate hikes this year, but he may need to change policy if the economy shows signs of overheating.
– Ali Wolf, Director of Economic Research
Resale inventory totaled 3.2 months of supply in December, which is far below the 6.0 equilibrium level.
The Case-Shiller 20-City Composite Index for November increased 6.4% YOY. The national index also rose by 6.2% over the same period.
The homeownership rate rose from 63.9% to 64.2% in the fourth quarter. This is the third quarter of growth, but remains below the historical average of 65.4%.
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