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High interest rates, the resumption of student loan payments, and rising gas prices are a few items that have kept consumer confidence down in the last couple of months. On the other hand, an improving inflation outlook and a still-solid labor market are some positives that should help the economy and the housing market weather the headwinds in the fourth quarter and carry them to a better 2024 once rates start coming down.
Inflation outlook brightens but rates remain elevated: The annual increase in prices, excluding food and energy, came in at 3.9% in August, the first time it dropped below 4% since June 2021. The core PCE price index – the Fed’s preferred inflation gauge – rose less than expected and had the smallest growth pace month-over-month since November 2020. While it is encouraging to see a cooling trend in overall prices, the optimism has not quite carried over to the mortgage finance arena. The average 30-year fixed rate mortgage went down 16 bps last Friday after the release of the inflation news but surged back up by 17 bps on the following Monday. More solid evidence of an economic slowdown will need to be seen before rates start coming down meaningfully. Also, rising oil prices heading into the fourth quarter could keep the overall inflation high in September and October. Relief, however, could be on its way to California, as an early switch to the cheaper winter-blend of fuel has been approved by the California Air Resources Board last Thursday.
Consumer confidence slips again as anxiety about the future grows: Rising gasoline prices and high interest rates weighed down consumers’ confidence last month, as the Conference Board’s Index fell to a four-month low. The drop of 5.7 points in the index was the biggest monthly decrease since December 2020. While the present situation component of the index inched up in Septembers, the sharp decline of 10 points from 83.3 in August to 73.7 in September suggest that Americans were concerned about their short-term outlook. The looming threat of a government shutdown, the resumption of student loan payments, and higher prices in groceries and gasoline were contributing factors to lower confidence reading in the past couple of months. Consumers are also growing more worried about the labor market, as those who reported jobs as hard to get inched up 4bps to 13.6% in September. The dip in confidence in recent months could translate into spending declines and slower economic growth in Q4 if the trend continues.
New home sales drop to 5-month lows: August sales of newly constructed single-family homes pulled back as rising mortgage rates began to weigh on new housing demand. New home sales declined 8.7% in August from July’s 739,000 units but increased 5.8% from 638,000 units recorded in August 2022. Home prices dipped slightly from 12 months ago, with last month’s median registering $430,300, a drop of $10,000 from a year ago. The dip in price of new home sales was due partly to builders using price cuts as incentives to reinvigorate buyer interest as mortgage rates continued to climb. The recent surge in rates is adding more stress to buyers and begins to take the momentum out of new housing demand. Elevated costs of borrowing may continue to slow sales in September and October as market indicators showed a decline in buyer traffic in both August and September.
Construction spending continues to trend up: Despite a pullback in new home sales, construction activity remained resilient in August. Total construction spending improved again for the eighth consecutive month with a year-over-year gain of 7.4%. Overall, residential construction outlays climbed again by 0.6% on a month-over-month basis but dipped below last year’s level by 3%. Single-family housing starts inched up solidly from July as developers remained cautiously optimistic about new housing demand in the future, despite the high mortgage rate environment in the near term. Multifamily projects, on the other hand, appeared to be slowing down and could be leveling off as multifamily construction spending inched up a more modest 0.6% from July. High financing costs and a flood of apartment units set to be delivered in coming years is likely the primary reason for the moderation in construction activity in this area.
If you would like to discuss if now is a good time for you to buy, sell, or invest in a home or investment property, please feel free to contact me.
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251 Elm Ave.
Long Beach 90802
2 Bed+Den | 3.5 Bath | 1,750 SF | $900,000
OPEN HOUSE
Saturday 12:00-3:00 pm
This exceptional modern townhome at The Huxton built in 2018 boasts 2 bedrooms, a den/great room, and 4 baths spanning 1,750 square feet. The large rooftop deck off the top-floor den/great room provides an exceptional indoor/outdoor living experience with seamless tri-fold sliding doors.
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4200 Via Norte
Cypress 90630
4 Bed | 3 Bath | 2,915 SF | $1,450,000
This luxurious 4-bed/3-bath Cypress home was expertly upgraded from the inside - out! No stone was left unturned in the vigorous pursuit of redesigning and upgrading this nearly 3,000 sqft Greenbrook home.
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436 N Bellflower Blvd #104
Long Beach 90814
1 Bed | 1 Bath | 693 SF | $475,000
Resort living in the heart of Long Beach. Stoneybrook is a highly desirable Gated Community. Walking distance to shopping, restaurants, Cal State Long Beach, the VA Medical Center and the Colorado Lagoon.
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2059 W 160th St.
Torrance 90504
2 Bed | 1 Bath | 837 SF | $779,900
Discover Your Dream Home in North Torrance! This charming 2-bedroom home is nestled on a serene residential street, offering you a remarkable opportunity to own in this sought-after neighborhood with great schools.
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807 Delaware St
Huntington Beach 92648
4 Bed | 5 Bath | 3,237 SF | $2,750,000
Tesoro Builders has created another extraordinary opportunity to own a brand new, custom designed single-family home in the heart of highly coveted downtown Huntington Beach. The epitome luxury living offers an exceptional beach lifestyle. Starting at $2,750,000, based on options and interest.
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1669 E 65th St.
Long Beach 90805
2 Bed | 2 Bath | 1,023 SF | $635,000
Charming Spanish style home with large living room with ample windows allowing plenty of natural Light, original hardwood floors, updated kitchen, central heat and AC, and a permitted rumpus Room with ADU potential.
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781 W 30th St
San Pedro 90731
3 Bed | 2 Bath | 2,067 SF | $1,225,000
Stunning 3-bed, 2-bath home with breathtaking ocean views in Coastal San Pedro. Experience the beauty of the ocean from the front yard, primary bedroom, and the expansive backyard. Situated on a generous 9,576 SF lot, there's plenty of space to potentially add an ADU.
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773 W 30th St
San Pedro 90731
3 Bed | 2 Bath | 1,040 SF | $955,000
Enjoy beautiful ocean and harbor views from the front yard, living room, and the expansive backyard. This 3-bed, 2-bath home offers even more possibilities with an additional enclosed patio area currently staged as a family room and game room. The spacious 8,904 SF lot provides ample room for expansion, including the possible potential to add an ADU.
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1007 Catalina Ave #108
Redondo Beach 90277
2 Bed | 2 Bath | 1,181 SF | $1,175,000
Welcome to Your Dream Beach Home! A Stunning 2 story, 2 bedroom, 2 bath condo located half a block to the beach. Beautifully updated throughout with dramatic high ceilings, gorgeous kitchen, and an abundance of natural light and open space.
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985 S. Idaho Ave. #60
La Habra 90631
2 Bed+Den | 2 Bath | 1,073 SF | $505,000
This 2 bedroom plus a den (currently being used as a 3rd bedroom) is tucked away in a peaceful serene location surrounded by beautiful trees in the Woodlake Villas of La Habra.
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211 Saint Joseph
Long Beach 90803
3 Bed | 2 Bath | 1,057 SF | $1,299,000
Welcome to this charming Belmont Shore home located just 4 blocks to the beach! Enjoy the open concept floor plan, granite countertops, hardwood flooring, and a serene primary suite with a spa-like bathroom. Don't miss this opportunity for coastal living at its finest!
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5528 Pearce Ave.
Lakewood 90712
3 Bed | 2 Bath | 1,592 SF | $845,000
The "Honey Due" list has already been done for you; all you have to do is move in and start enjoying this 3-bedroom 2 bath Lakewood home. Open concept kitchen with newer cabinets, stainless steel appliances and granite countertops.
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Tim Majka
(562) 900-9430
Tim@ImagineRealty.com
www.ImagineRealty.com
DRE#01399855
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