Overview: Mortgage rates held relatively steady over the past couple of weeks. The major economic data was close to the expected levels, and comments from Federal Reserve officials were mostly in line with the investor outlook for future monetary policy.
A highly anticipated speech on Wednesday from Fed Chair Jerome Powell was consistent with recent comments from other officials. Powell noted some progress in bringing down inflation but emphasized that there is still “a long way to go” to restore price stability. Since the effects of monetary policy changes take many months to work their way through the economy, he said that the time to moderate the pace of rate hikes may come as soon as the next meeting on December 14. Powell also suggested that the important question now is not how large additional rate hikes are, but how high the Fed will need to raise the federal funds rate and how long it will need to keep them at that level.
Hurt by higher mortgage rates, sales of existing homes fell for the ninth straight month in October to the lowest level since 2011 and were 28% lower than last year at this time. Inventory levels were slightly lower than a year ago, at just a 3.3-month supply nationally. Although the median existing-home price of $379,100 was 7% higher than a year ago, this was down from a record high of $413,800 in June. A lack of inventory of homes has been a lingering issue, and relief from new construction continues to be disappointingly slow. In October, overall housing starts fell 4% from September and were 9% lower than a year ago. Single-family starts were down 22% from a year ago to the lowest level since May 2020, early in the pandemic. Higher prices and shortages for land, materials, and skilled labor remained major issues holding back builders.
The Job Openings and Labor Turnover Survey (JOLTS) report revealed signs that the extremely tight labor market may be starting to loosen a bit. In October, job openings fell to 10.3 million, below the consensus forecast of 10.5 million. A lower level of openings means that it is easier for companies to hire workers with the required skills, reducing inflationary pressures from wage increases.
Existing Home Sales (millions)
December 1 — Personal Consumption Expenditures (PCE) Price Index
December 2 — Employment Report