top of page

Fed Holds Steady

Economic Observer: Up-to-date information on the latest financial news

Overview: With little major economic data over the past week, investors were focused on the Federal Reserve meeting. Overall, Fed officials were a bit more hawkish (favoring tighter monetary policy) than expected, but mortgage rates ended the week nearly unchanged.


 

As expected, the Fed held the federal funds rate steady on Wednesday at a target range of 4.25% to 4.50%. The changes to the meeting statement were relatively minor, with one possible exception. Investors took note of the removal of the reference that inflation “has made progress toward” the Fed’s inflation goal of 2% annually. When asked about this during the press conference following the meeting, Chair Powell stated that the change was not intended to signal any new information. There also were several questions about how officials are factoring in potential policy changes under the new administration. In general, Powell simply responded that it increases uncertainty in the short-term, but they remain focused on incoming economic data to make future decisions. Investors are now divided about whether there will be one or two 25 basis-point rate cuts before the end of this year.


In the housing sector, December sales of existing homes, which account for roughly 85% of the total market, rose 2% from November to the highest level since February. With the latest gains, sales were 9% higher than a year ago. The median existing-home price of $404,400 was up 6% from last year at this time. Inventory levels remain highly depressed, standing at just a 3.3-month supply nationally, far below the 6-month supply typical in a balanced market. The trend is positive, though, as inventories were 16% higher than a year ago.


The latest results were similar for the segment containing newly constructed homes. In December, new-home sales, which account for the remaining 15% of the market, increased 4% from November and were 7% higher than a year ago. The median new-home price of $427,000 was up a little from 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.


 

Existing-Home Sales (millions)

Bar Chart showing the monthly change in Retail Sales as a percentage change from April to December 2024

 

Week Ahead


Jan. 30

Q4 gross domestic product (GDP)


Jan. 31

Personal Income and Outlays

Personal Consumption Expenditures (PCE) Price Index


Feb. 3

Institute for Supply Management (ISM) Manufacturing Index


Feb. 5

ISM Services Index


Feb. 7

Employment Report

Comments


Commenting has been turned off.

Powered by ICE Mortgage Technology

 

© 2025 Market Perspective Newsletter. All Rights Reserved. 

bottom of page