Freddie Mac's Latest Analysis

Today on LUXE BLOG, we’re going over the latest analysis from Freddie Mac. This November 2024 report delivers a clear snapshot of the U.S. economy, housing, and mortgage trends. The spotlight? Housing supply. It’s still lagging, with a shortage of 3.7 million units nationwide. Below, we go over the report and its statistics.

Resilient Economy & A Shifting Labor Market

The U.S. economy keeps exceeding expectations. Growth continues to impress, but cracks are starting to show in the labor market.

• Q3 GDP grew 2.8%, slightly down from Q2’s 3.0%.
• Consumer spending jumped 3.7%, its strongest pace since early 2023.
• Job growth slowed to just 12,000 in October due to hurricanes and strikes.
• Unemployment steady at 4.1%, while wages grew 4% YoY.
• Inflation cooled further, with core PCE inflation at 2.7%.

The economy’s strength may ease in 2025 as the labor market softens and spending slows. But for now? It’s holding strong.

Also Read: Where Gen Z Wants To Reside – The Top Cities For Young Adults

Housing Market Stays Tight

It’s no secret. Housing supply is a problem. Rates are up, inventory is low, and affordability is slipping further away.

• Existing home sales hit a 14-year low, just 3.84 million in September.
• New home sales edged up slightly, boosted by builder incentives.
• Housing starts fell 0.5%, with multifamily construction down over 15%.
• Prices rose 4.2% YoY in August, slower than 2022’s highs.
• Inventory crept up, with 4.3 months’ supply of existing homes available.

The housing market’s chokehold isn’t loosening yet. Builders and buyers alike are waiting for rates to drop.

The Persistent Housing Shortage

The numbers don’t lie. The U.S. housing market remains deeply undersupplied.

• Shortfall of 3.7 million units, down slightly from 3.8 million in 2020.
• 5.8 million housing units added since 2020, but demand outpaced supply.
• Inflation-adjusted rents climbed 11% since 2000.
• Vacancy rates are 10.1%, far below the target of 11.7%.

Building more homes is critical, but high interest rates and construction costs keep slowing progress.

Also Read: The Federal Reserve Cuts Interest Rates For First Time In Years

Mortgage Rates Surge Again

After a brief dip, mortgage rates are climbing. It’s keeping buyers on the sidelines and locking sellers into existing loans.

• October’s 30-year fixed mortgage rate averaged 6.43%.
• September’s rates were at a two-year low of 6.08%.
• Rate lock-in effect climbed, with an October average of $42,000.
• Historical trends show mortgage rates stabilize after Fed rate cuts.

For now, volatility rules. But there’s hope for gradual relief as 2025 progresses.

Looking For Solutions

Solving the housing supply crisis requires creativity. Builders, policymakers, and communities need to think outside the box.

• ADUs: Small, flexible, and fast to build.
• Land trusts: Shared ownership for long-term affordability.
• Manufactured homes: Affordable and growing in popularity.
• Condo conversions: Turning underused buildings into housing.

The shortage won’t vanish overnight. But these strategies could chip away at the problem.

Freddie Mac’s report paints a complex picture of resilience and challenge. The economy shows strength, but the housing market needs answers. Stay tuned to LUXE BLOG for more on these critical shifts and how they’ll shape 2025.