Market Trends April 2024

Housing Market Forecast Wells Fargo
Wells Fargo (WF) recently released an overview of the prospects for the housing market over the next few years.
Overall, WF expects the residential sector to improve over the years ahead.
 
Mortgage rates should continue to decline as the Fed gradually lowers rates. WF expects the average 30-year mortgage rate to end 2024 at 6.2% and 2025 at 5.8%.
 
Lower mortgage rates should boost existing home sales, which should improve modestly to a 4.3 million unit pace this year and more substantially to 4.7 million units in 2025.
 
Falling mortgage rates should keep demand running slightly ahead of supplies.
 
The “lock-in effect” will likely continue as the vast majority of homeowners with mortgages have rates below 5%, and WF does not see rates falling below 5% over the next two years.
 
Housing affordability will continue to remain a problem. WF expects the S&P CoreLogic National Home Price Index to rise 3.1% in 2024 and 4.3% in 2025.
 
New home sales are expected to increase to a 721,000 unit pace this year as home buyers turn to more available and affordable new homes.
 
New single-family starts should grow to a 990,000 unit pace in 2024 and 1.04 million-unit pace in 2025. Multifamily development is slowing as vacancies rise and rent growth slows.
Households are generally on good financial footing. Despite record-level consumer spending, people are not over-leveraged. Rising financial assets and residential real estate values have led to continued gains in household net worth.
 
Home equity is at record levels as residential real estate values continue to increase.
 
Young Millennial buyers should support steady demand. Young Millennials are entering or are currently in the midst of their prime home buying years. Household formation from this age group bodes well for continuing demand.
 
Preferences have shifted toward single-family homes with larger spaces to better accommodate hybrid work and other virtual activities.
 
Weekly office attendance is still running about 50% lower than pre-pandemic, an indication that hybrid work may be here to stay. Recent research shows that 40% of employees work from home at least one day a week.
 
The demographic shift to the suburbs has been accelerated by workers spending more time at home and less time at the office.
 
Commercial development is also migrating away from central business districts, which could attract even more people to the suburbs and reinforce demand for single-family homes.
 
Resale inventories are not expected to meaningfully improve. WF does not expect a material rise in unemployment. A soft job market and rising unemployment can increase the number of distressed sales. In addition, many Baby Boomers are staying put and choosing to remodel and age in place.
 
National Retail Federation Forecast
The National Retail Federation (NRF) forecasts retail sales will grow 2.5% to 3.5% and reach $5.23 trillion in 2024.
 
Non-store and online sales are expected to grow between 7% and 9% to $1.47 to $1.5 trillion. Retail sales grew 3.6% to $5.1 trillion in 2023.
 
NRF expects the unemployment rate to reach 4% for the full year. The tight labor market, with its robust job growth and wage gains that fuel consumer spending, is expected to cool in 2024.
 
Fewer new jobs will be created. With the pace of the economy slowing in 2024, NRF expects about 100,000 fewer jobs on average per month compared with 2023.
 
GDP growth should slow from 2.5% in 2023 to 2.3% growth in 2024, still strong enough to sustain job growth.
 
Inflation is expected to moderate to 2.2% this year, very close to the Fed’s desired rate of 2%.
 
Consumer spending will remain strong. Despite a tight labor market, consumer balance sheets remain strong, and rising home and stock prices should stimulate consumer spending.
 
Retailers Rethink Self-Checkout
Self-checkout was designed to speed up checkout for shoppers and save retailers money on labor costs but now some retailers are pulling back. Analysts say that self-checkout lanes are more susceptible to theft.
 
Reportedly some Walmart stores are closing some self-checkout lanes and reserving other exclusively for members of Walmart+ and delivery drivers.
 
Target is limiting self-checkout to 10 items or less and opening more fully staffed checkout lanes. Customer reaction is less than enthusiastic; many people appreciate the speed an autonomy of self-checkout and the ability to pack their purchases themselves.
 
Target recently revealed they lost $500 million more in inventory shrink in 2023 than they did in 2022 and are hopeful these new changes will help those stats improve.
 
Fewer than half (43%) of all consumers prefer self-checkout to traditional checkout, according to an NCR Voyix survey of 1,133 Americans. Self-checkout is more popular with younger shoppers with 53% of shoppers ages 18 to 44 favoring it, the survey found.

Next Section

​© Robert Bosch Tool Corporation.  All rights reserved, no copying or reproducing is permitted without prior written approval.