US economy to rebound in 2024? Housing market struggles, manufacturing rebounds
US housing market
The housing slump in the US continues. Existing home sales slumped for a third consecutive month in May as record-high prices and rising mortgage rates kept potential buyers at bay. This comes as the labour market continues to ease.
The housing inventory hit a two-year high last month. This supply can potentially offset rising costs and improve affordability. However, addressing high mortgage rates is crucial for housing market recovery. The average rate on the popular 30-year fixed mortgage raced to a six-month high in early May.
Home sales dropped 0.7 per cent to an annual rate of 4.11 million units. This is above the economists' predictions but is still a considerable drop.
US Federal Reserve's hawkish stance also plays a role. The decision to maintain interest rates comes amid a 'wait-and-watch' approach, as the central bank waits for economic cues to normalise. This could be a gamble since geopolitical turmoil, which adds to the bearish outlook, continues to hurt consumer sentiments.
However, a recent S&P survey found a silver lining for the US economy and a potential boost for the Fed's policies. The survey finds that expansion in June is set to hit a 2-year high. Employment also surged for the first time in three months. The survey signals a rosy outlook and robust economic recovery for the US by year-end. This surge in optimism is led by a manufacturing rebound. The survey highlights that the 'slow and steady' economic growth aligns with the Fed's expectations to begin rate cuts later in the year.
Still, the housing market continues to hurt the US economic recovery.