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Originally Posted On: https://www.empower.com/the-currency/money/one-thing-2024-march-22

… is groundbreaking change to guidelines for real estate commission fees that could result in lower costs – and meaningful savings – for home buyers and sellers.

In a $418 million settlement agreement, the trade group National Association of Realtors announced it will increase transparency in real estate commission fees. Some estimate these changes could lower agent fees by 1-2%, resulting in tens of thousands of dollars of savings when closing a deal.1

Many would-be buyers are up against still-high housing prices and mortgage rates.2 But it’s also starting to look more promising to builders who lay the foundation – literally.

Homebuilders’ optimism in the housing market is rising – reaching its highest level since last summer – with an eye toward purchasing activity. According to the National Association of Home Builders (NAHB) housing market index, the builders’ confidence index rose to 51 in March from 48 in February, showing a net optimistic outlook for the first time since last July.3 This latest release also marks the fourth month of increasing confidence. On a scale of “good” to “poor,” the majority of builders view current sales, sales over the next six months, and buyer traffic as “good.” view current sales, sales over the next six months, and buyer traffic as “good.”

Sentiment is likely buoyed by hopes the Federal Reserve will cut rates in 2024, which could further stimulate demand in the housing market. Although mortgage rates remain historically high, the current average 30-year rate of 6.97% is below this year’s peak of 7.06% in mid-February, and it could continue to decrease if the central bank does cut rates this year, as investors and analysts expect it will.4

However, the index also highlighted several persistent challenges, including lot and labor shortages, rising building costs, and high lumber prices. This could be contributing to the high cost of housing faced by prospective homebuyers. Less than a quarter of homebuilders reported price cuts in March.

Other housing data released this week echoed the NAHB’s largely positive news: Building permits and housing starts increased more than expected in February, with the latter rising nearly 11% month-over-month.5

In response to high post-pandemic inflation, the Federal Reserve embarked on an aggressive rate-hiking campaign. Consequently, mortgage rates surged to their highest level since the early 2000s, and demand in the real estate market fell significantly.6

Normally, as demand falls, prices fall with it. However, a widespread shortage of housing, exacerbated by homeowners unwilling to forgo the low mortgage rates locked in before the steep increase, has effectively frozen the market and kept prices elevated.

This combination dealt a blow to housing market sentiment in recent years: With housing prices steep and mortgage rates hovering near multi-decade highs, prospective buyers have faced major affordability challenges. As a result, sales volume declined, leaving homebuilders pessimistic as well. But this latest report suggests that may be changing.

With the markets anticipating three rate cuts in 2024, mortgage rates would fall as a result, both helping buyers afford houses and encouraging more homeowners with low-rate mortgages to finally sell.7 It may be just what’s needed to thaw the frozen market.

That said, the median home price is also sitting near record highs, according to the National Realtor’s Association.8 A boost in demand could send prices even higher, potentially offsetting some of the lower mortgage rates. Still, after years of a tough housing market, it’s promising to see sentiment improving.

1. Cocoa prices surged to a record high of more than $8,000 per metric ton amid weather-related shortages in West Africa, which produces about two-thirds of the global cocoa supply.9

• The ongoing supply shortages could spell bad news for chocolate lovers heading into springtime holidays and possibly through Halloween, as chocolate producers may look to pass along higher costs to consumers.

2. According to Bloomberg, Alphabet is reportedly in talks with Apple to license its AI chatbot Gemini for future iPhones.10

• If this deal materializes, iPhone users may see a variety of new AI-powered features built into their phones.

3. The cost of a new car is decelerating after a year of high borrowing costs and limited supply, in February at $47,244, dipping 2.2% from the year prior and down 5.4% from the market peak in December 2022.11

• New cars are still up 14% from two years prior, with labor costs and technology components keeping prices elevated. When’s best to buy? Experts predict the months between April and July will yield the best incentives.

Next week is the release of the Federal Reserve’s most closely watched inflation index: core personal consumption expenditures (PCE).

January’s PCE data showed the sharpest month-over-month increase in prices since February 2023. Other inflation data, including the most recent Consumer Price Index (CPI) and Producer Price Index (PPI) data, have also shown an uptick.12

Another hotter-than-expected inflation print could easily push back rate-lowering expectations once again. The longer rates stay where they are, the longer buyers will have to weather higher borrowing costs – a major headwind for the consumer-driven economy and a housing market that may finally be mounting a comeback.