If the Federal Reserve continues hold off on interest rate hikes as it did this week, the real estate market could become more active, but Zonda Chief Economist Ali Wolf said she believes the pause won’t last, jeopardizing a market comeback. She was the keynote speaker at the June 14 Greater Houston Builders Association midyear forecast luncheon.

The big picture

• The national labor market is strong as total employment is 2% above prepandemic levels, according to Wolf’s analysis.
• Houston’s unemployment rate is 4%, which economists consider to be full employment.
• Inflation is still high, but it seems to have peaked in 2022, Wolf said.
• In the transportation sector, inflation is 10.2%; the restaurant industry is seeing inflation at 8.3%; and housing costs are up 8% due to inflation.

Also of note

• The national monthly mortgage payment is up 40% compared to last year, which is an improvement from a 60% change seen four to six weeks ago.
• Price cuts and incentives have generally been effective in drumming up demand, a sign that the desire for homeownership is still there, Wolf said.
• Wolf’s research indicates there is a large number of prospective homebuyers; however, factors such as supply chain and labor shortages are making it difficult for builders to complete new housing projects.

The bottom line

Patience is the name of the game for builders, lenders, buyers and sellers, said Wolf, who encouraged real estate industry professionals to market the right properties to the appropriate potential buyer based on current conditions.