Overview: For the most part, investors spent the past week just waiting for Wednesday’s Federal Reserve meeting. There were no surprises from the meeting, however, and mortgage rates ended the week slightly higher.
As widely expected, the Fed increased the federal funds rate by 25 basis points to a target range of 5.25% - 5.5%, the highest level since 2001. The decision received unanimous approval from all voting officials. The big question for investors is whether there will be any more rate hikes, but officials opted to keep their options wide open rather than providing precise guidance. According to the statement released following the meeting, they will “continue to assess additional information” to determine appropriate future monetary policy. In short, their decisions will continue to be data dependent, determined largely by the path of inflation. According to Chair Jerome Powell, it’s possible that the Fed could opt to hold rates steady, but the labor market remains “very tight” and the battle against inflation has “a long way to go.” Investors are divided about whether there will be one more 25 basis-point rate increase before the end of the year.
In housing news, existing-home sales in June fell 3% from May, a little more than the consensus forecast, and were 19% lower than last year at this time. This was the slowest sales pace for June since 2009. Inventory levels stand at just a 3-month supply nationally, far below the 6-month supply typical in a balanced market. The median existing-home price of $410,200 was slightly below the record high seen in June 2022. Sales of new homes in June unexpectedly also declined 3% from May, falling well short of the consensus forecast, and the strong results from May were revised significantly lower. Despite the weak results, however, new-home sales still were 24% higher than last year at this time. A severe shortage of previously owned homes available for sale has been boosting the market for new homes in recent months.
Existing-Home Sales (millions)
July 27 — Q2 Gross Domestic Product (GDP)
Personal Income and Outlays
Personal Consumption Expenditures (PCE) Price Index
August 1 — Institute for Supply Management (ISM) Manufacturing Index
August 3 — ISM Services Index
August 4 — Employment Report