The Softwood Forest Products Buyer - March/April 2024

(The

(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