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Home Sales Slip

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

Overview: With little significant economic news, mortgage markets were quiet over the past week. The focus remains on the future path of inflation, and it will take several months of consistent data for investors and Federal Reserve officials to feel comfortable drawing conclusions about the trend. Mortgage rates ended the week with little change.


The minutes from the May 1 Fed meeting released on Wednesday revealed no significant new information beyond what officials have said in recent speeches. In short, there is broad agreement about remaining patient and assessing incoming economic data for several months before lowering the federal funds rate. The minutes noted a lack of “further progress” in bringing down inflation recently, with troubling increases in some components of both goods and services prices. Officials generally feel that the risks of maintaining tighter policy for too long and loosening it too soon are roughly balanced, so they prefer to wait for "greater confidence" that inflation will resume its downward path. Most investors now anticipate that the first rate cut will take place in September.


Sales of existing homes in April fell 2% from March, slightly more than the consensus forecast, and were down a little from last year at this time. Inventory levels remain near historic lows, standing at just a 3.5-month supply nationally, far below the 6-month supply typical in a balanced market. The median existing-home price of $407,600 was up 6% from last year at this time, posting a record high for the month of April. According to the chief economist of the National Association of Realtors®, the “lock-in effect” continues to restrain home sales activity. Essentially, a large number of homeowners locked in mortgage rates at much lower levels during the pandemic, and they are understandably reluctant to move and take on a new mortgage at current levels.  


While a greater supply of homes continues to be desperately needed in many regions, the latest data was somewhat disappointing. In April, overall housing starts rose 6% from the prior month, far less than expected, and the results for March were revised down to the lowest level since June 2020. The gains came entirely from multi-family units, while single-family units declined slightly in April. Single-family building permits, a leading indicator of future home construction, fell for the third straight month to the lowest level since August. The story looks substantially brighter in the bigger picture, however, as single-family starts still were 18% higher than a year ago.


Existing-Home Sales (millions)

Chart of Existing Home Sales from August 2023 to April 2024, showing a range of 3.88 million to 4.38 million homes sold each month during that time


Week Ahead

May 23

New-Home Sales report

May 24

Mortgage markets close early for Memorial Day.

May 27

Mortgage markets closed for Memorial Day.

May 28

Consumer Confidence Index

May 31

Personal Income and Outlays

Personal Consumption Expenditures (PCE) Price Index


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