The economy is like a body of water, where nothing is entirely isolated and everything feels ripples from activity in other places. That is definitely the case with the housing market! Changes in home sales ripples out into lots of other areas, and as we know the housing market has been nuts for a while now. So, as the year draws to a close let’s take a look at some of those ripples.
Here are Five Fast Facts on the housing market’s impact on jobs and other sectors:
- 💸 The Trigger - This story begins, of course, with the government. They spent boatloads of money in the pandemic so inflation soared, and the Fed raised interest rates to get it under control. Those higher interest rates basically froze the housing market – October was a 13-year low in home sales – because people with great mortgage rates didn’t want to lose them.
- 🏠📺 The Connection - Home sales really impacts several other sectors, including retail. When people buy a home, they almost always buy furniture, TVs, curtains, and lots of other stuff to put in it. There’s often remodeling before or after a sale, too.
- 💰 Retail - Sales on home furnishings are down about 7% this year, and it’s clearly linked to lower home sales. The local Stuff Mart would really love it if you could buy a new house real quick, mm-kay?
- 📉 Real Estate - Employment in real estate grew around 1%, but that was down from about 3% last year and 5% the year before. At least it’s not going backwards! But it’s still a sign of the negative ripple effect from home sales.
- 🏗️ Construction - Application for building permits are generally used as a signal for how the construction sector is going, and it’s been a crazy year for that. In January, permits were down about 30% from last year, but by October they’re only down about 4%. So, while it’s still ugly, at least it’s going in the right direction.
🔥Bottom line: It’s not all gloom and doom, but there are definitely some issues of major concern as a result of home sales in recent times. Here’s hoping the economy levels out a bit and some sanity (and predictability) returns.
How has lower home sales affected you?
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