Welcome to the latest installment of The Full Measure with Kevin Hecht—your destination for the most current economic insights and analyses. Catered to real estate appraisers, agents, and other professionals, this monthly blog series helps you navigate the ever-evolving economic environment. Uncover this month’s economic trends and insights—written from an appraiser’s standpoint—in the following economic recap for November 2023.
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Economic recap November 2023
October was a pivotal month, marked by key decisions from the Federal Reserve, fluctuating labor market data, and shifts in interest rate trends. These factors paint a complex landscape for homebuyers, sellers, and investors.
The Federal Reserve’s cautionary approach
The month kicked off with a crucial Federal Reserve meeting where interest rates were left unchanged. Chair Powell highlighted the committee’s ongoing deliberations, hinting that a December rate hike is possible but depends on upcoming data. Inflation remains an unpredictable factor, with Powell acknowledging its erratic nature.
Navigating a transforming U.S. economy and housing market
In the third quarter of 2023, the United States economy demonstrated significant resilience, achieving a robust growth rate of 5.2%—its strongest expansion since late 2021. This vigorous growth, propelled by consumer spending and private inventory investment, underscores the continuing strength and adaptability of the country’s economic framework.
However, October painted a more intricate picture, especially regarding developments in the labor market. Despite adding jobs, the month saw the economy fall short of expectations—creating only 150,000 jobs compared to the anticipated 190,000. This slowdown was further accentuated by downward revisions in the job gains previously reported for September and August.
At the same time, the unemployment rate in October crept slightly higher to 3.9%—still a historically low level that continues to signal a robust jobs environment favorable for seekers. This picture is further reinforced by the ongoing consistency in job openings, quit rates, and steady jobless claims, suggesting labor market resilience despite recent hiccups.
On the inflation front, October brought some encouraging news. Notable decreases in energy prices reduced the annual Consumer Price Index increase, while the Core CPI, excluding volatile food and energy costs, also declined—hinting at a potential stabilization of inflationary pressures.
October was a month of shifting dynamics and regional variations in the housing market. The Pending Home Sales Index rose in the Northeast but fell across other parts of the country, with the steepest decline in the West. New home sales largely echoed this trend. At the same time, new home construction starts increased to their highest annual rate since 2006—indicating sustained interest among buyers toward new builds as supply constraints for existing homes persist.
For potential homebuyers, however, the current landscape presents ongoing affordability challenges as mortgage rates remain elevated from historical averages despite easing slightly from recent peaks. On the other hand, the rental market continues to offer some financial relief, with the national median rent dropping for the sixth straight month.
As the Federal Reserve maintains its cautious approach on interest rates, the housing market may be poised to see further stabilization in coming months based on recent data—although likely still facing constraints around supply, pricing power, and regional differences.
Conclusion
In summary, while resilience was on display across parts of the economy, the intricacies within October’s jobs and inflation data underscore the nuances still facing the country’s economic picture. However, key areas like GDP growth and new home construction momentum point to glimmers of light amidst the uncertainty. Challenges persist for homebuyers and the housing sector, but signs of leveling also exist.
For real estate appraisers, the shifting dynamics in October indicate that remaining agile and responsive to rapid market changes will be key. Given the regional variations in housing data and affordability trends, appraisers should pay close attention to localized price movements rather than rely solely on national metrics. With the pivot towards new construction gaining steam, development patterns for single-family homes, in particular, should be closely tracked.
As the market stabilizes further, appraisers may need to smooth out recent extreme value fluctuations in their modeling and analyses rather than make dramatic adjustments. Maintaining a perspective on broader economic contexts will also help provide reasoned explanations around value changes. Precision, adaptability, and localized insight are pivotal for appraisers in this transformative environment.
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Written by Kevin Hecht. Kevin has been a real estate appraiser since 1987, and currently holds a Certified Residential appraiser license in Missouri. As a McKissock Learning instructor, Kevin specializes in market analysis, USPAP, and real estate economics. In addition to being an appraiser, Kevin is an Adjunct Professor of Economics at Maryville University.
