Last Week In A Nutshell
- A quiet week was capped by a surprisingly dovish speech from Fed Chair Powell, who set the stage for the Fed to restart rate cuts at their September 17 meeting, bringing rates down to end the week.
This Week’s Attractions
The upcoming week looks to be very quiet on market-moving economic events as we eagerly await the next jobs report on September 5.
- Fed:
- PCE inflation (Friday 8/29) – Core PCE, the Fed’s preferred inflation gauge, is expected to come in at 0.3% month over month and 2.9% year over year for July based on the CPI and PPI readings earlier this month, which feed into the PCE measure. That would show that inflation is higher than the Fed’s target and increasing, but perhaps not as much feared three months after tariff announcements on April 2 (“Liberation Day”). PCE rarely surprises because the input data comes from the same sources as CPI and PPI.
- Housing:
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- New home sales (Monday 8/25) – New single-family home sales declined by 0.6% from June to a seasonally-adjusted annualized rate of 652,000 units in July (8.2 percent below July 2024). However, prior months were revised up significantly. Months of supply remained high at 9.2 months, 16.5% above July 2024. There is also a higher than typical 4.9 months of inventory currently under construction. The median sale price is down 5.9% from a year ago, mostly due to builders selling smaller homes.
- Case Shiller Home Price Index for June (Tuesday 8/26) – Based on Redfin’s Home Price Index, which has reported prices through July, we expect that Case Shiller’s index will show that home price growth is continuing to decline.
- NAR Pending Sales Index (Thursday 8/28) – Redfin’s pending sales data for July was down about 1%, both month over month and year over year.
Last Week’s Highlights
- Jackson Hole: Chair Powell finally allowed that it may be time to “adjust” the Fed’s monetary policy stance after a weak August jobs report shifted the balance of risk from inflation to recession fears. Rates fell as investors predicted a higher likelihood for the Fed to resume cuts at their September 17 meeting. However, as of this morning, that rate cut is still only 86% priced in because there is still some chance for the next jobs and inflation reports to derail expectations. As such, there is room for rates to fall slightly more if the September data comes in weak, or to increase significantly if the data comes in strong.
- Housing:
- Housing starts and building permits – Housing starts increased 5.2% in July with single-family starts increasing 2.8% to 939,000 (down 4.2% year-to-date) and multifamily starts increasing 9.9% to 489,000. Permits decreased 2.8% to 1.35m units in July. Single-family permits increased 0.5% and multifamily permits decreased 8.2%.
- NAR existing home sales – NAR EHS increased 2.0% to an annualized rate of 4.01m (0.8% higher than a year ago). Interestingly, the non-seasonally adjusted rate actually fell 0.8% from a month ago and is 0.5% lower than a year ago. Overall, sales remain at a similarly sluggish rate as what we’ve seen over the last three years.
Diving a Little Deeper:
Here are a few highlights from Redfin housing market reports last week:
- July market tracker –
- The typical home that went under contract in July sat on the market for 43 days—the longest July span since 2015—as pending sales hit a two-year low.
- Some sellers are reacting by, well, not selling; active listings posted the largest monthly drop since 2023.
- Home prices rose 1.4% year over year, a faster rate of growth than we’ve seen in recent months, likely due to shrinking supply. The good news for buyers is mortgage rates have fallen.
- Redfin Home Price Index
- U.S. home prices fell 0.1% in July, the third month-over-month decline in the past three months.
- On a year-over-year basis, home prices rose 2.9%, the lowest annual rate in Redfin’s records going back to 2012.
- A record 39 of the top 50 U.S. metros saw month-over-month price declines.
- Contract cancellations
- 15% of home purchases fell through last month—the highest July rate on record—as high homebuying costs made buyers skittish. Cancellations were most common in Texas and Florida.
