Overview: Market-moving events were scarce over the past week. No major economic data was released, and no developments in the Middle East caused much market reaction. Mortgage rates ended the week slightly lower but remain near the highest levels in decades.
Higher mortgage rates and a shortage of inventory continue to restrain housing market activity. In September, sales of existing homes, which typically make up about 90% of the market, fell a little from August and were 15% lower than last year at this time. This was the slowest sales pace since October 2010. Inventory levels stand at just a 3.4-month supply nationally, well below the 6-month supply typical in a balanced market, and the number of single-family homes available for sale is now at the lowest level since 1982. The median existing-home price of $394,300 was 3% higher than last year at this time.
The latest results were far superior for the segment containing newly constructed homes. In September, new-home sales, which account for the remaining 10% of the market under normal circumstances, far exceeded expectations with an increase of 12% from August. Sales were 34% higher than a year ago, at the best level since early 2022. The median new-home price of $418,800 was 12% lower than last year at this time, and builders have been widely reporting offering financial incentives to try to lure buyers.
In a speech on Thursday, Federal Reserve Chair Powell again emphasized that future policy decisions will be based on incoming economic data. He talked about the significant gains in the battle against inflation but also said that the fight must continue to get back down to the 2% annual target. According to Powell, further progress is likely to require slower economic growth and some weakening of the labor market. Investor expectations about whether there will be another 25 basis-point increase in the federal funds rate before the Fed is done hiking were nearly unchanged after the speech, still close to 50%.
Existing-Home Sales (millions)
October 26 — Q3 gross domestic product (GDP)
European Central Bank meeting
October 27 — Personal Income and Outlays
Personal Consumption Expenditures (PCE) Index
November 1 — Federal Reserve Meeting