Inflation data & a Fed announcement on the same day
We start this morning with fresh inflation data and follow that up with a dose of Fedpseak from Federal Reserve Chairman Jerome Powell in the early afternoon. What could that mean for the market? A recent article from CNBC detailed the potential impact.
Economists are predicting that inflation will show a monthly increase of 0.1% from April 2024 to May 2024, but that would still mean an annual rise of 3.4%. Anything lower will be seen as inflation is cooling and anything higher will indicate that inflation is still proving to be sticky.
However, when it comes to interest rates, it’s a virtual lock for the Federal Reserve to continue to hold steady. The area of concern here is how tough or soft the Fed’s outlook for price stability and job growth will sound. If Chairman Powell indicates that higher interest rates will last into the New Year, the markets could take a tumble. On the other hand, if he makes it sound like he’s seeing adequate progress, we could see a rally.
What would 2% inflation mean for mortgage rates?
A recent report from the World Bank detailed what could happen if the Federal Reserve is able to achieve its target of a 2% inflation rate. According to their analysis, mortgage rates would drop dramatically as the cost of borrowing money would decrease, and the housing market would start to see greater activity.
What kind of timeline did the World Bank provide? Well, the report stated, “By the end of 2026, borrowing rates are expected to have declined substantially as inflation returns close to target.”
As for the short-term analysis, the global financial institution claimed that U.S. economic growth will perform better in 2024 compared to the initial estimate earlier in the year. They predict the U.S. economy will expand by 2.5% this year, up from the initial 1.6% forecast.
Why do certain homes just never sell?
There are always houses on the market that never seem to find a new owner even in a booming housing market. Why does this happen? A recent article from Realtor.com surveyed real estate professionals to better understand why some houses just don’t sell.
Listing agent Zyel Silve from Chinatti Realty has seen his fair share of homes that linger. In the case of some properties, bad luck keeps them on the market longer than normal. Silva cited a perfectly normal home in Manchester, NH that saw a series of deals fall through due to several unforeseen circumstances. It finally found a home after several months, but saw multiple buyers drop out late in the process.
Poor presentation can also be an issue. Cara Ameer, a real estate agent licensed in California and Florida, had a beautiful property in Ponte Vedra Beach that had an outdated layout and ended up spending six years on the market before finding a buyer.
When it comes to listings that linger, Realtor.com data analyst Hannah Jones said, “Buyers should not necessarily be turned off by a home that has spent a long time on the market. It’s worth discussing with the seller’s agent.”
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