Overview: Over the past week, the focus was on the Federal Reserve, and all signs point to rate cuts later in the year. The economic data contained no significant surprises and caused little reaction. Mortgage rates ended the week slightly lower.
In a speech on Friday at the Jackson Hole economic summit, Fed Chair Jerome Powell said that "the time has come” to loosen monetary policy. According to Powell, inflation has declined "significantly” and the labor market is "no longer overheated.” He added that the timing and pace of rate cuts will be determined by incoming data, the evolving economic outlook, and the balance of risks between higher inflation and slower growth. Investors now anticipate that there will be a reduction in the federal funds rate at the next meeting in September, which would be the first since early in the pandemic. The current debate is whether this rate cut will be 25 or 50 basis points.
In the housing sector, July sales of existing homes, which account for roughly 85% of the total market, rose slightly from June. This was the first increase in five months, and sales still were a little lower than a year ago. The median existing-home price of $422,600 was up 4% from last year at this time. Inventory levels remain near historic lows, standing at just a 4-month supply nationally, far below the 6-month supply typical in a balanced market. The trend is positive, though, as inventories were 20% higher than a year ago.
The latest results were significantly better for the segment containing newly constructed homes. In July, new-home sales, which account for the remaining 15% of the market, unexpectedly jumped 11% from June to the highest level since May 2023. The median new-home price of $429,800 was slightly lower than a year ago. While existing-home sales measure actual closings during the month, new-home sales are based on contracts signed, making them a leading indicator of future housing market activity. In other words, the positive impact of the lower mortgage rates seen in July will take a little longer to appear in the data for existing-home sales.
Existing-Home Sales (millions)
Week Ahead
Aug. 30
Personal Income and Outlays
Personal Consumption Expenditures (PCE) Price Index
Sep. 3
Institute for Supply Management (ISM) Manufacturing Index
Sep. 5
ISM Services Index
Sep. 6
Employment Report
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