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Home Sales Down

Overview: With little major economic data released over the past week, investors were mostly focused on comments from Federal Reserve officials. All signs pointed to the Fed further tightening monetary policy to fight inflation, and mortgage rates climbed to their highest levels since November.


The minutes from the February 1 Fed meeting were released on Wednesday, and in them the Fed repeated its firm commitment to maintaining restrictive monetary policy to fight inflation. According to the minutes, inflation remained “well above” their stated annual target level of 2%, and labor markets remained “very tight, contributing to upward pressure on wages and prices.” Since the Fed meeting took place, extremely strong Employment and Retail Sales reports have come out, further supporting the case for additional tightening. Investors currently anticipate 25 basis-point rate hikes at the March and May meetings, and possibly the June meeting. Sales of existing homes fell yet again in January to the lowest level since 2010 and were 37% lower than last year at this time. Inventory levels were an encouraging 15% higher than a year ago but remain at just a 2.9-month supply nationally. A 5-month to 6-month supply is generally viewed as a healthy balance between buyers and sellers. While the median existing-home price of $359,000 was slightly higher than last January, this was down from a record high of $413,800 in June. The latest data on much-needed home building contained mixed news. In January, housing starts dropped for the fifth straight month to the lowest level since June 2020, near the start of the pandemic. Starts were a disappointing 21% lower than last year at this time. By contrast, a monthly survey from the National Association of Home Builders (NAHB) showed that home builder confidence unexpectedly jumped from 35 to 42, the highest reading since September. This sentiment index indicates that builders are significantly more optimistic about future buyer traffic and other industry conditions.


Existing Home Sales (Millions)

Week Ahead

February 24

New-Home Sales report

Personal Consumption Expenditures (PCE) Price Index

March 1

Institute for Supply Management (ISM) Manufacturing Index

March 3

ISM Services Index



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