What should we expect from today’s Fed announcement?

A block of tidy and well-maintained houses is located on Eason Street in the Highland Park community in Detroit | mortgage rate news

What should we expect from the Fed today?

According to the latest data from Altos Research, home sales are growing, but will the momentum continue?

Based on the recent data, it seems likely, but there was a slowdown as mortgage rates rose slightly and half the country was plunged into a cold snap.

Home sales are up about 5% comparing the current market to the same time last year. Also, active inventory is up 8% compared to the same time last year. Not only are more homes on the market, but more homes are also getting sold.

When it comes to home prices, they’re up when compared to the same time last year, and that’s expected to continue this year. The national median home price is up about 1% week-over-week, and about 6.8% higher from last year.The Federal Reserve is set to make its first announcement of 2024 today. They’ve spent the past two years ratcheting up interest rates, and it’s widely expected that they’ll start cutting at some point this year, but will it be today?

LendingTree senior economist Jacob Channel wrote, “The Fed is being very cautious as it navigates the potential for future rate cuts. While it doesn’t want to leave rates high forever, it also doesn’t want to cut them prematurely and risk inflation spiking again.”

Channel went on to write, “Owing to this, we’re likely going to see the Fed hold rates steady for a few more months while they wait to get an even clearer picture of how the economy is doing and where it’s likely to be headed.”

The expectation of market watchers is that the Fed will hold rates steady this month and potentially look to cut starting at the March 19-20 meeting. Nine in 10 economists polled believe that the Fed will issue a rate reduction at its April 30-May 1 meeting.

What’s the latest from S&P Case-Shiller index?

The S&P Case-Shiller national home price index was released yesterday. The index showed that housing prices came in cooler than expected in November 2023, and broke a streak of monthly gains that stretched back to January 2023.

Brian D. Luke, head of commodities, real & digital assets at S&P DJI, stated, “US home prices edged downward from their all-time high in November. The streak of nine monthly gains ended in November, setting the index back to levels last seen over the summer months.”

The 20-city composite index showed a 0.2% month-over-month decrease from October 2023 to November 2023. The biggest annual gains came in Detroit and San Diego, while the biggest annual decrease was registered in Portland.

What are the latest housing market forecasts?

Moody’s Analytics had one of the more bearish forecasts on the housing market heading into 2024. However, Moody’s chief economist, Mark Zandi, recently adjusted his guidance to a more neutral tone for the short term, but still predicted home prices to dip by 0.4% by the end of the year.

Zandi said, “I expect national house prices to be flat to modestly down over the next 2-3 years. This, along with rising household incomes and lower mortgage rates should eventually repair housing affordability and revive existing home sales.”

Zandi also stated that he expects the U.S. economy to avoid recession in 2024.

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