Autumn kitchen interior. Red and yellow leaves and flowers in the vase and pumpkin on light background

While the U.S. reported its first gain in economic activity in the past three quarters, consumer confidence was less upbeat in October compared to September. Inflation is still a problem and despite growing nominal incomes, households continue to deplete their savings and rely more on their credit cards. With rates above 7% and the Federal Reserve remaining aggressive in raising rates, potential homebuyers will continue to face affordability headwinds in the coming months. Housing demand continues to pull back as evidenced by a decline in new home sales and the lowest mortgage application pace in the last 25 years.

 

New home sales fall back, resuming downward trend: Sales of newly built homes declined 10.9% to a 603K unit pace during September. This monthly decline in sales pushed 17.6% behind last year’s level and below pre-pandemic levels. The National Association of Home Builders also reported cancelations being double what they were a year ago. Demand for homes - both existing and new - have been severely impacted by the affordability challenge that potential buyers are facing as interest rates have risen for most of the year. New houses for sale stayed on the market longer as demand continued to slow and inventory rose from 8.1 months in August to 9.2 months in September.

 

Mortgage applications dip to the slowest pace since 1997: Mortgage rates continued climbing last week for the 10th week in a row. According to Freddie Mac’s weekly survey results, 30-year fixed-rate mortgages (FRM) averaged 7.08% as of October 27 – up from 6.94% the week prior and 3.14% a year ago. It was the first time since April 2022 that the 30-year FRM surpassed 7%. Meanwhile, mortgage applications for the week ending October 21 decreased 1.7% from the week prior, dropping to the lowest level in 25 years. The seasonally adjusted purchase application index declined 2% to the slowest pace since 2015 and the unadjusted figure was 42% behind last year’s level. With costs of borrowing remaining high, housing demand will continue to be weak as the holiday season approaches. 

 

Net exports boost U.S. GDP in 2002-Q3: The U.S. economy expanded in Q3-2022 as GDP grew by a 2.6% annualized rate after contracting in the first two quarters of the year. Although the latest headline GDP reading is more positive relative to the numbers in Q1-2022 and Q2-2022, the current growth pace is considerably slower than what the economy experienced in the second half of 2021. The underlying sectors contributing to the U.S. GDP measure showed a surge in net exports that boosted an otherwise slowing economy in the last three months. Total consumer spending and fixed investment spending, in fact, were virtually unchanged on a quarter-to-quarter basis. With the Fed raising rates another 75 basis points this past Wednesday, a slowdown in the U.S. economy is expected in the next few months. 

 

Spending continues to grow faster than income for 8th time in 9 months: Consumer spending rose 0.6% in September, outpacing personal income growth of 0.4% registered in the same month. Households have been spending more than what they have earned for most of the year when inflation is taken into consideration. Consumers continue to draw down from the savings that they accumulated in the past two years and increasingly rely on their credit cards. With the saving rate dipping to pre-2008 low of 3.1%, the spending trend is not sustainable and a pull-back in consumer spending is expected in the coming months. 

 

Consumer confidence pulls back as present situation becomes less upbeat: The Consumer Confidence Index by the Conference Board, decreased in October after back-to-back monthly gains. The index fell to 102.5 from a downward revised 107.8 the month prior. The dip was due primarily to a deterioration in the assessment of their present situation, which declined sharply from 150.2 last month to 138.9 in October – the lowest since April 2021. Inflation, which started picking up again in recent weeks, remains the main concern for consumers. The intention to purchase homes surprisingly rose from the prior month, despite rates rising above 7%.

 

Despite all of the negative news, there are opportunities for buyers and sellers. Lenders are offering options for home buyers to buy down their interest rate and sellers in some cases are offering credits to help buyers obtain a more affordable rate.  If you would like to discuss today's market and whether now is a good time for you to buy or sell, give me a call at (562) 900-9430.

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605 Redondo Ave. #305 

Long Beach 90814

2 Beds | 2 Baths | 1,121 SqFt | $2,700

 

Beautiful 2 bedroom, 2 bath condo with parking and inside laundry in Bluff Heights.

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1215 Ohio Ave #2A, 

Long Beach 90804 

2 Beds | 2 Baths | 898 SqFt | $425,000

 

Nicely updated 2 bedroom, 2 bath, 

2 story townhome style condo with a private garage.  

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853 E. Helmick St 

Carson 90746

4 Beds | 2 Bath | 1,612 SqFt | $820,000

 

Welcome home to this beautiful 4 bedroom home in a highly sought after neighborhood in Carson. 

3595 Santa Fe Ave. #21

Long Beach 90810

2 Beds | 2 Bath | 1,506 SqFt | $440,000

 

Why rent when you can own! Great opportunity to own this 2 bedroom 2 bath home in a gated community!

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819 Atlantic Ave. #1

Long Beach 90813 

2 Beds | 2 Bath | 1,219 SqFt | $565,000

 

Absolutely beautiful 2-story condo located in prime Long Beach just blocks away from downtown and the beach.

942 N. Loma Vista Dr.

Long Beach 90813 

2 Beds | 1 Bath | 1,158 SqFt | $785,000

 

Beautifully updated Craftsman home located in the Historic Willmore District overlooking Drake Park on a huge 8,536 sf lot.

4271 Petaluma Ave.

Lakewood 90713 

2 Beds | 1 Bath | 949 SqFt | $840,000

 

Looking for a home that is in pristine condition, immaculately clean, open, bright & cozy, in a premier location, on a tree lined street and with "wow factor" curb appeal and reasonably priced? Look no further.

4034 Country Club Dr.

Lakewood 90712 

3 Beds | 4 Baths | 3,358 SqFt | $1,819,798

 

Absolutely beautiful golf course, pool home in Lakewood Country Club Estates.

1210 E 11th St. 

Long Beach 90813

2 Beds | 1 Baths | 702 SqFt | $550,000 

 

Must see remodeled two-bedroom one bath home in Long Beach! Close to schools, shopping, restaurants, and freeways this home is conveniently located to all.

1310 E. Ocean Blvd #1403

Long Beach 90802 

2 Beds | 3 Baths | 2,014 SqFt | $1,575,000

 

Absolutely breathtaking ocean views from every room in this oceanfront penthouse condo at the Ocean Club

100 W 5th St #3C

Long Beach 90802 

3 Beds | 2 Baths | 2,147 SqFt | $955,000

 

Amazing loft at the Kress Lofts in Downtown Long Beach. This was the architect's home and features the largest floor plan in the building.

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