As summer winds down and our children head back to school, the national economy heads toward a possible turning point.
Amid a troubling resurgence of COVID cases fueled by the delta variant, strong economic readings have emerged.
Industries, consumers and the housing market are attempting to find “normal” this fall and winter as we close in on two years of the coronavirus pandemic.
Growing demand, disrupted supply chains and labor shortages have all contributed to sharp rises in consumer prices. Many home builders are effectively turning away business. Ongoing issues with prices, zoning and skilled labor make it almost impossible for them to make a profit on entry-level homes, the price point that is hurting the most.
But coupled with lower interest rates and continuing consumer demand, home sales are still near all-time highs, even with very low inventories available.
But listings of existing homes have increased markedly in the past few months and many analysts expect thousands more to appear as pandemic forbearances expire in September.
The bad news is an estimated about 1 million homeowners may emerge from these programs seriously delinquent on their loans – with payments 90 days or more past due.
Some good news: Several federal agencies, including the department of Housing and Urban Development (HUD) have announced intention to provide these homeowners with a 25% reduction in monthly payments and the option of moving missed payments to the end of the mortgage at no additional cost.
More good news: Unlike the Great Recession, where some 10 million lost their homes, many struggling homeowners have built a cushion of home equity. Rather than being foreclosed upon, they can likely sell.
Another silver lining: The Mortgage Bankers Association announced that credit availability eased in the second quarter. The growing supply could mean more homes to choose from and less competition for many potential buyers.
While sellers continue to have the upper hand, buying a home has become slightly easier. Home-price growth is stabilizing following months of record gains.
Despite the ongoing health crisis, vaccination rates are strengthening in many parts of the country. Nearly 55% have received full doses, and some states are approaching 60 and even 70 percent. There is hope.
On the economic side, employers added nearly 1 million jobs in July, and the first week of August saw the lowest initial weekly jobless claims since March 2020, a rate only slightly above what we’d see in a normal labor market.