The Softwood Forest Products Buyer - March/April 2024

(The following article was first published in www.newsweek.com.
All data cited is the most current at press time for this publication.)
WASHINGTON REPORT
Housing Market May Be Headed For A Shift
By Omar Mohammed
FENCES THAT
STAND FOR
SOMETHING.
At Alta Forest Products, our fences stand just a little bit taller. Craftsmanship,
sustainability and American-grown Western Red Cedar are at the core of who we
are. We value relationships more than anything, and believe in giving our partners
the right tools to get the job done.
A strong U.S. economy will be a boon for the housing market, Mortgage Bankers
Association's (MBA) chief economist said (recently), as it will buoy demand
and as inflation continues to fall, mortgage rates will decline as well making
home loans more affordable for buyers.
The U.S. economy accelerated at a faster-than-expected clip in the fourth
quarter of 2023 at 3.3 percent, the Commerce Department's Bureau of Economic
Analysis revealed.
Meanwhile, the personal consumption expenditures (PCE) price index—the
Federal Reserve's preferred measurement of inflation's progress—jumped by 1.7
percent during the quarter. Core PCE, which excludes the often volatile food and
energy prices, increased by 2 percent.
These dynamics bode well for the housing market that has been struggling under
the weight of record-high mortgage rates, sparked in part by the Fed's hiking
of rates is at the most aggressive clip since the 1980s to fight soaring inflation.
The Fed's funds rate (at the time of this article's writing) sits at 5.25 to 5.5
percent—the highest they have been in two decades—and policymakers have
signaled that they will slash rates should inflation come down to their 2 percent
target.
But an economy that may avoid a recession as inflation moderates without the
Fed's tight monetary policy doing too much damage to the jobs market would
help the housing sector.
"Stronger economic growth will benefit the housing market, keeping demand
robust," Mike Fratantoni, MBA's chief economist, said in a statement shared with
Newsweek. "Moreover, today's report also showed further reductions in inflation,
which will enable the Federal Reserve to cut rates later this year—as they have
been hinting."
Mortgage rates ticked up slightly for the week ending January 25, Freddie Mac
said at the time of this article's
writing, with the 30-year fixed
rate averaging 6.69 percent.
"The 30-year fixed-rate has
remained within a very narrow
range over the last month, settling
in at 6.69 percent this week," Sam
Khater, Freddie Mac's chief economist,
said in a statement.
Rates look to have stabilized,
Khater suggested, encouraging
buyers to jump off the fence.
"Despite persistent inventory
challenges, we anticipate a busier
spring homebuying season than
2023, with home prices continuing
to increase at a steady
pace," he said.
A slowdown in rates could
have a negative impact on home
buyers, some analysts say.
A decline in the cost of home
loans would encourage more
purchases, and this increase in
demand will spark competition
at a time when there is a limited
supply of homes for sale.
More buyers who can afford
mortgages entering the market
will push up prices, analysts from
Goldman Sachs said this week.
The investment bank's experts
www.altafp.com 800-599-5596
project prices to soar by 5 percent
in 2024, a marked revision from
their earlier expectation of a 2
percent jump. That trend will
continue through next year when
prices are forecast to increase
by nearly 4 percent, which is
also a change from a previously
estimated increase of close to 3
percent.
Amid the price increases, Goldman
Sachs analysts anticipate
that rates will fall to 6.63 percent
for the year. This drop in rates
from the near 8 percent highs of
November 2023, will make house
loans more affordable, sparking
more demand for properties.
"We have very low inventory
Continued on page 49
Page 18 Softwood Forest Products Buyer • March/April 2024
C
M
Y
CM
MY
CY
CMY
K
Stay Above
Supply Struggles
Agility ERP keeps your inventory and order management info in one place.
Real-time. Automatically updated. At your fingertips 24/7.
This is how you make powerful, data-driven decisions.
Learn more at DMSi.com