Housing and economic updates

Sumedha Shukla
September 30, 2023

Keeping Current

  • Existing home sales fell 0.7% in August to an annual sales rate of 4.04 million units. August marks the 17th monthly decline in the past 19 months. Year-to-date, existing home sales through the first eight months of 2023 are down 21.4% from sales through the same period in 2022.
     
  • During its September 19-20 meetings, the Federal Reserve held its interest rate target range steady at 5.25% to 5.50%. Twelve of the 19 members of the Federal Open Market Committee, the Fed’s monetary policy arm, indicated that they expect the FOMC would increase the target range by 25 basis points before year-end. Two meetings remain this year, concluding on November 1 and December 13. The target range began 2023 at 4.25% to 4.50%
  • Assuming the Fed does bump the target rate up to 5.50% to 5.75%, as the majority of FOMC members expect, then all but two of the 19 FOMC members expect to lower the target range in 2024. Four members expect just one 25-bp decrease, back to where we are today, and 13 others expect the target range to fall below its current level by year-end 2024. One FOMC member expects rate hikes next year to put the target range at 6.00% to 6.25%.
  • Housing starts dropped 11.3% in August to an annual rate of 1.28 million units, its lowest rate in more than three years. Year-to-date, starts are down 12.5% in 2023 compared to the first eight months of 2022. Single-family starts YTD are down 15.1% from last year, while multifamily starts are down 7.4%.
  • The National Association of Home Builders/Wells Fargo Housing Market Index fell below 50 for the first time in the last five months. A reading above 50 indicates a favorable outlook among builders for single-family sales; a reading below 50 suggests pessimism. The 5-point decline to 45 in the September reading follows a 6-point decline in August.

  • A steep 5.6% increase in energy prices in August (not an annual rate) pushed the Consumer Price Index up 0.6% for the month, which was twice the average monthly gain of the previous 12 months. Over the year ending in August, the CPI is up 3.7%, accelerating from the 3.2% year-ago increase recorded in July.
  • The Core CPI, which excludes the food and energy sectors, rose 0.3% in August, generating a 4.3% increase over the previous 12 months. The year-ago number has decelerated in each of the five months since March’s 5.6% reading.
  • Industrial production rose 0.4% in August and is up 0.2% over the past year. During 2010-19, industrial production expanded at a 1.4% average annual rate.
  • Mortgage rates edged up in the week ending September 21 to stand at 7.19%, one basis point higher than the previous week. Through the first three weeks of the month, the mortgage rate averaged 7.16%; it averaged 7.07% in August and 6.84% in July. Its lowest point in the past 52 weeks came in February at 6.09%. The peak over the past year of 7.23% came the week of August 24. The rate quoted is the average of 30-year fixed-rate conforming mortgages submitted to Freddie Mac.

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