Housing market braces for more layoffs ‘soon’ as mortgage lenders, home sellers cut thousands of jobs

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The overall resilience of the labor market continues to baffle experts, but the plight of rising interest rates that has fueled a historic plunge in home sales could soon lead to tougher job cuts across the housing sector. There is a nature. The companies seen have laid off thousands of workers in recent months.

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Despite the unexpected work report Pantheon Macro chief economist Ian Shepherdson said on Friday that resilience will be “predictable” as the impact of higher interest rates ripples through the economy, with rate-sensitive sectors such as housing expected to be hit hardest. “It’s likely to change in the next few months.”

“Layoffs across the housing ecosystem are sure to rise soon,” Shepherdson said, warning that the struggle will be similar to the well-publicized tech layoffs. hit giants Last week’s Stripe and Twitter could continue This week with Facebook parent Meta.

“The housing market is cooling as interest rates scare new buyers,” said Andrew Challenger of carrier services firm Challenger Gray & Christmas, who said both housing starts and permits fell. He pointed out that brokerage firm Redfin reported that existing home sales plunged 35% in 2018. It’s the biggest drop since we started collecting data in 2015.

It’s still unclear how many jobs will be lost, but home-selling platform Opendoor began implementing large-scale layoffs last week at many of the companies in the housing sector. say it The company had cut about 18% of its workforce, or about 550 employees, to navigate “one of the most challenging real estate markets in 40 years.”

Lenders are also taking a big hit: Mortgage giant LoanDepot this summer announced Thousands of job cuts, and Wells Fargo reportedly Expect about 2,000 loan officers as mortgage volumes plunged 90% year-over-year.

“The changes we have made recently are a result of the broader interest rate environment and are consistent with the reaction of other lenders in the industry,” a Wells Fargo spokesperson said in a statement to CNBC, adding that the bank will It added that it is adjusting and adjusting staffing “on a regular basis.” in market conditions.

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“Layoffs have not yet increased. Given how difficult it was for companies to rehire workers after the initial coronavirus shock, the hurdles to laying off workers are probably higher than in previous cycles. But that could change in the coming months,” Shepardson said.

Things to watch out for

Home improvement giants Home Depot and Lowe’s are confident they will provide an update on how the downturn in the housing market has affected their businesses when they report earnings next Tuesday and Wednesday, respectively.

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The surge in prices has forced central banks around the world to roll back pandemic-era policy measures aimed at strengthening markets. The Federal Reserve’s rate hikes hit the once-booming housing market particularly hard.New home sales plunged to a six-year low this summer, and mortgage applications plummeted. suggestion The collapse will only get worse. Fed Chairman Jerome Powell several times alluded to Citing a “mixed picture” for the housing market this summer, he said prices would cool as mortgage rates normalize at higher levels after staying at historically low levels during the pandemic. .

References

Federal Reserve’s Jerome Powell – haunted by Paul Volcker’s ghost – could tank the economy (Forbes)

Housing Market Collapse: ‘Strong’ Deceleration in Home Prices as Warning Signs ‘Eerily Similar’ to 2000s Crisis (Forbes)

The labor market added 261,000 jobs in October as the unemployment rate rose to 3.7% (Forbes)

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