Economic Outlook
Timing TroubleWhile many equity investors try to time market tops and bottoms to improve returns, their results have only gotten worse since Covid. Between 1/1/2015 and 12/31/2019, market timing attempts across a variety of actively traded mutual-fund styles cost investors 0.53 percentage points/year. However, from 1/1/2020 through 10/21/24, value destruction from poor timing almost doubled to 1.01 percentage points/year. This deterioration is probably because more do-it-yourself investors began playing the market.
Worker Weakness
November employment growth was a hearty 227,000, and there were upward revisions totaling 56,000 to September and October. The good November result confirms the weak October result was due to hurricanes and the Boeing strike. However, the unemployment rate rose slightly to 4.2% despite the labor force participation rate falling to 62.5% which shows the labor market continues to slowly weaken, making a 25bps mid-December Fed rate cut highly likely.
Tariff Totals
61% of the price of a new home is construction, including labor. Of the 61%, 56% (or 34% of the total price) is wages/salaries and 44% (or 27% of the price) is material. 7.3% of materials (or 2% of the total price) are imported. A median new home price of $440,000 means $9,000 in imported materials. Assuming a 30% tariff, that means new home prices rise by, at most, $3,000.
Miserable Masters
Almost half of U.S. government student lending goes to postgraduates even though they are 17% of all students. Moreover, since 2000 the inflation-adjusted cost of graduate studies has tripled, and the average debt load has risen by 50% to $50,000 in the last 20 years. Making this much worse, after accounting for SES and undergraduate grades, in the U.S. earning a master’s raises average lifetime wages by a trivial $50,000.
Broker Bucks
While it’s still very early and the existing housing market is profoundly weak, preliminary evidence shows real estate agent commissions declining since new rules went into effect in mid-August following a landmark legal settlement. From mid-August through early October, average commissions received by buyer agents were 2.28% compared to 2.65% over the prior year. Interestingly, seller agent commissions also declined, going from 2.98% to 2.69%. These declines follow economic theory.
Electric Enhancements
For all the talk of a slowdown in U.S. electric vehicle sales, U.S. drivers purchased 346,000 battery-powered vehicles in 24Q3, a 5% Q-o-Q rise and an 11% Y-o-Y increase. EVs now comprise 9% of new car sales, the highest level on record. Tesla easily retained its EV sales crown by delivering 167,000 vehicles. However, its share is now 48% and continues to decline as more affordable, longer-range vehicles appear.
2025 COLOR FORECAST
Whether it’s a vibrant pop, muted hue or jewel tone, adding color is a way to breathe life into a new home or add personality to a room looking for an update. No matter the circumstance, choosing a wall color is not an easy feat. Sifting through hundreds of swatches can be overwhelming. Thankfully, the top paint manufacturers have released their picks for “color of the year.”Here is a look at which colors these companies see trending in 2025 and it’s looking like purples, browns and beach house colors are going to make their marks.
Purples:
Behr: Rumors; “A luxurious ruby red adding warmth and rich allure."
Glidden: Purple Basil; "A captivating hue is a blend of warmth and energy, inviting you to embrace the transformative power of color in your space."
Benjamin Moore: Cinnamon Slate; “A delicate mix of heathered plum and velvety brown, this nuanced color brings a smooth familiarity to any design.”
Minwax: Violet; “Creates eclectic interiors and unique pieces that come together to make your home feel mystically whimsy.”
Browns:
Pantone: Mocha Mousse; “A warming, brown hue imbued with richness. It nurtures us with its suggestion of the delectable qualities of chocolate and coffee, answering our desire for comfort.”
C2: Raku: “An earthy, burnt, brownish red with oxidized undertones that infuse spaces with drama and intimacy. It’s a deep yet vibrant tone with dynamic undertones of rich mahogany that exude a sense of security, simplicity, and sophistication.”
Dunn Edwards: Caramelized; “A warm terracotta brown with soft, earthy tones reminiscent of sunbaked clay. The ultimate new neutral, this sophisticated color demonstrates versatility, pairing well with various styles, from vintage-inspired interiors to sleek, contemporary spaces that embrace the concept of ‘old is new.’
Beach:
HGTV Home by Sherwin-Williams: Quietude; “Finds its power in its transcendent tranquility. A soft sage with a whisper of blue influence, Quietude is an emerging color for enduring design and soothes any space inside or out.”
Valspar: Encore; “An anchoring shade that embodies constancy and confidence to let you create a joyful respite from the ebbs and flows of life.”
Dutch Boy: Mapped Blue; “A versatile medium tone blue with subtle yellow undertones that provides a dependable foundation for homeowners’ evolving personal styles.”
Lastly, Sherwin-Williams opted for a curated collection of colors for their “2025 Color Capsule of the Year” and it fits in nicely with the trends above, featuring a light, muted shade of purple called “Mauve Finery;” shades of brown like “Grounded” and “Clove.”
Resilient Housing Market Set to Improve in 2025
Consistency in mortgage rates, consumer sentiment
By Vincent Salandro,
For builders, navigating the 2024 housing market has required ample flexibility, adaptability, and resilience. Mortgage rate volatility, election uncertainty, significant weather events, pockets of soft demand, heightened land market competitiveness, and affordability concerns were among the challenges facing companies in the calendar year.
Public home builders have largely shared optimistic outlooks for the remainder of 2024 and 2025 during earnings calls, highlighting plans for community count, starts, and volume growth. Private peers shared similar sentiments with BUILDER, highlighting the numerous challenges facing the industry while maintaining positive outlooks for growth targets in 2025.
Navigating the Market in 2024
When sharing reflections on the 2024 housing market, executives from private home builders used phrases including “not great,” “resilient,” and “defined by adaptability.”
Minto Communities president Mike Belmont and Drees Homes president Tim Terrell both highlighted that because mortgage rates remained elevated even following the beginning of Federal Reserve’s rate cuts, the market was challenging, and many potential buyers took a pause. CBH Homes vice president Ronda Conger says the year reinforced the importance of adaptability, with themes of affordability and quick move-in options likely to remain important in 2025.
For DRB Group, corporate vice president of sales, marketing, and branding Char Kurihara says 2024 was the first post-COVID year that followed “a more seasonal pattern with regards to appointments and traffic.”
“We saw upticks in August, September, and October month over month in our traffic; however, as in most election years, there is a high level of engagement in the fall with a slight dip in sales until after the election,” Kurihara says. “This year, we are seeing traffic trend up and sales are holding steady [post election].”
Conger says 2024 demand for CBH Homes was “strong” after a slower than expected start in the spring. Conger says the “dynamic’ market gained momentum post-spring.
“We saw spikes in typical months that in prior years were slower,” Conger says. “External factors like interest rate fluctuations influenced demand, but by closely monitoring traffic, adjusting pricing and incentives as needed, we’ve stayed aligned with buyer expectations.”
Belmont says sales and traffic were “slower than the previous year” in 2024 with the exception of Minto Communities’ Westlake community in Palm Beach County, Florida.