August 2024 Residential Construction

This morning, Jerusalem Demsas and I were guests on the NPR program On Point. We discussed the Harris housing plan, down payment assistance, and the state of housing supply. It aired live this morning on WBUR in Boston and will air at various times today on other stations. It should be available for streaming later tonight.

I was pleased to see the Fed cut its target rate today by 50 points. Real GDP growth is running about 3% and inflation expectations are below 2%. This is the soft landing. I think the bullseye for this cycle is really large. I don’t think we are close to any potential big errors in either direction. But it was probably time to cut. The long end of the yield curve looks like it actually rose on the news. That’s a sign that it was the right decision.

Because of that, mortgage rates are unlikely to move much on the news. That’s fine. The new housing market doesn’t depend on mortgage rates. The decline in very short term rates might help grease the wheels on short-term construction lending. As I will show below the paywall, it is probably now time to help that happen. Today’s residential construction report also seems to confirm that the 50 point cut was the right move.

Details below.