Overview: Since the Federal Reserve meeting on March 20, there has been little major economic news, with the most significant data coming from the housing sector. Its impact was minor, and mortgage rates were nearly unchanged over the past week.
Despite high mortgage rates and a shortage of inventory in many areas, home sales activity far exceeded expectations in the latest report. In February, sales of existing homes, which make up about 85% of the market, jumped 10% from January to the highest level in a year. This was even more impressive considering that inventory levels stand at just a 2.9-month supply nationally, well below the 6-month supply typical in a balanced market. The median existing-home price of $384,500 was 6% higher than a year ago. To put this in perspective, median home prices rose about 50% from the middle of 2020 to a peak of $416,000 at the end of 2022 before higher mortgage rates caused prices to ease back down to current levels. A lack of affordable homes is particularly hurting first-time buyers who represented just 26% of sales in February, far below typical levels of around 40% historically.
The latest results were more unfavorable for the segment containing newly constructed homes, but these figures tend to be very volatile from month to month. In February, new-home sales, which account for the remaining 15% of the market, unexpectedly fell slightly from January, yet still were 6% higher than a year ago. The median new-home price of $400,500 was 8% lower than last year at this time, and builders have been widely reporting offering financial incentives to try to lure buyers.
The monthly report on consumer confidence published by the Conference Board has been receiving more attention recently, since it may provide hints about upcoming changes in spending habits and expectations about future inflation. The latest reading released this week revealed a larger than expected decline to the lowest level in four months. According to the report, anxiety about the political environment was the top concern behind the drop. In addition, consumers’ inflation expectations increased slightly in February.
Existing-Home Sales (millions)
Week Ahead
Mar. 28
Mortgage markets close early for Good Friday.
Mar. 29
Personal Income and Outlays
Personal Consumption Expenditures (PCE) Price Index
Mortgage markets closed for Good Friday.
Apr. 1
Institute for Supply Management (ISM) Manufacturing Index
Apr. 3
ISM Services Index
Apr. 5
Employment Report