Overview: There was little major economic news during the final weeks of 2024, and it was a relatively quiet period for mortgage markets. The most significant economic report, the latest inflation data, caused little reaction. Mortgage rates ended the week near their highest levels since May.
Federal Reserve officials keep a close eye on inflation, and the Personal Consumption Expenditures (PCE) Price Index is their favored indicator. In November, core PCE rose just 0.1% from October and was 2.8% higher than a year ago, the same annual rate of increase as last month. While far below its recent peak, further progress toward the 2% target of the Fed has been difficult, and this level has not been reached since February 2021.
In the housing sector, sales of existing homes, which account for roughly 85% of the total market, jumped to an 8-month high in November. Sales rose 5% from October, more than expected, and were 6% higher than a year ago, the largest annual increase since June 2021. The median existing-home price of $406,100 was up 5% from last year at this time. Inventories remain at historically low levels, standing at just a 3.8-month supply nationally, far below the 6-month supply that is typical in a balanced market. The recent trend is favorable, however, as inventories were 18% higher than a year ago.
The latest monthly results were similar for the segment containing newly constructed homes. In November, new-home sales, which account for the remaining 15% of the market, increased 6% from October and were 9% higher than a year ago. The median new-home price of $402,600 was 6% 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.
Core PCE (annual % change)
Week Ahead
Jan. 3
Institute for Supply Management (ISM) Manufacturing Index
Jan. 6
ISM Services Index
Jan. 10
Employment Report
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