Welcome back to Home Economics, a newsletter about the American housing market. This is The Week in Review, my weekly recap of macro and real estate news. Articles with a ◎ are free. Those with a ◉ have free previews but are only accessible in full for paying subscribers. Upgrade your subscription here:

🚨 Today I am sharing the most useful tool I have developed to date: Housing Policy Analyst, a ChatGPT chatbot. The Analyst is trained on a repository of academic papers related to housing, especially affordability, zoning regulations, land-use policy, and the economics of housing.

You can ask the Analyst questions like:

• What are the key takeaways from the latest research on housing affordability?

• How might increasing housing supply affect prices, according to recent studies?

• Can you summarize the most compelling arguments for policy changes?

After reading Cameron Murray’s searing criticism of Edward Glaeser’s work this morning, I asked the Analyst how Glaeser would respond:

I’ve calibrated the Analyst to ensure it helps users understand the balance between empirical findings, theoretical frameworks, and policy debates on housing issues—delivered in a nerdy but casual tone readers of this newsletter might appreciate.

Paying subscribers can find the link to the Housing Policy Analyst here ◉.

Next week is relatively data-light, with the Fannie Mae Home Purchase Sentiment Index (HPSI) on Monday, inflation data on Wednesday, and Zillow home prices—my favorite early indicator of where prices are headed—on Thursday.

Subscribers can download the housing economic data calendar here ◉.
Why I love the Zillow index, here ◉:

One Home Price Index to Rule them All? Aziz Sunderji · Apr 4 Read full story

News: Residential construction spending declined
Views: Homebuilding follows prices. Both should bounce around the current low level of gains.

Residential construction spending decreased in July. This makes sense: as prices moderate, so should homebuilding. Total residential outlays slid 0.4% in July, the first decline in four months. Prior data was revised upwards slightly, but a downtrend in both single and multifamily permits, decelerating home prices, and ongoing weakness in the Architecture Billings Index, suggest more weakness in construction ahead.

I showed the relationship between home prices and home starts last year, here ◉ and in the chart below. The TLDR: “periods of declining construction and falling prices (at least, in real terms) have overlapped. And, in terms of timing, prices tend to fall before construction cools. This makes sense, since it takes time for homebuilding companies to adjust to the falling demand, or oversupply, signaled by falling prices.”

As price gains slow, the historical relationship between prices and construction suggests construction will continue to slow, too.

News: Job growth was weaker than expected
Views: The Fed is on track for cuts later this month

Nonfarm payrolls rose 142k in August, below expectations. Prior releases were revised down. The unemployment rate ticked down by 3bp to 4.22% (reflecting a decline in temporary layoffs but a rise in unemployed new entrants as a share of the labor force).

According to Goldman Sachs, “the underlying pace of job growth based on the payroll and household surveys now stands at 120k after adjusting for the undercounting of immigration in the official statistics, below our estimated breakeven rate of 150k jobs/month.” In other words, despite this month’s slight tick down in unemployment, the economy is not adding jobs fast enough to prevent the unemployment rate from rising in the future.

Most big banks still expect a quarter point cut at the next FOMC meeting, in 10 days time.

Slow Horses, Season 4. I love this show. Gary Oldman is spectacular as a rumpled, washed up detective running a team of MI-5 misfits. Critics say this is the best season yet. I haven’t started watching it yet, but it’s in my queue. Slow Horses, on Apple TV, here ◉.

Ripley. Set in the 1960s, this show follows con man Tom Ripley (Andrew Scott) who is hired to travel to Italy to bring a wealthy family's son home to New York. Shot in black and white, Steve Zaillian's eight-part limited series based on Patricia Highsmith's Tom Ripley novels is stunning to look at and a delight to watch. Ripley, on Netflix, here ◉.

Apple Watch. I’ve used one of these in the past, but it didn’t stick. When my wife abandoned hers last week, I adopted it. These things are dangerous—the last time I used one I just ended up frazzled with all the constant beeping and booping. But I’ve carefully calibrated my focus mode settings such that I only get critical notifications when I am working. The tech has also improved since I last wore an Apple Watch, and things like maps and tapping to enter the subway are really useful. I hate to shill Apple products, but the company will announce a new lineup of watches tomorrow. Just saying.

PS: I wrote about “Focus Mode”—a critical setting for Apple users—in a Week in Review from May ◉, here:

The Week in Review Aziz Sunderji · May 11 Read full story

I hope you’re having a great weekend.