What did Chairman Powell have to say to the Senate?

Is Chairman Powell still worried about inflation?

One of the key topics Federal Reserve Chairman Jerome Powell was asked about in his Senate testimony was inflation. He had a lot to say on the topic.

First, Powell stated, “We do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2%.” However, he followed that statement by saying, “The most recent inflation readings, however, have shown some modest further progress, and more good data would strengthen our confidence that inflation is moving sustainably toward 2%.”

Powell also indicated that he has seen the expected cool off in the labor market. On the topic of jobs, Powell said the jobs market was “strong, but not overheated.” He also said, “If we see that the labor market were weakening unexpectedly, which is to say more than what we’ve seen in a material way unexpectedly, then we could also respond to that, because we have a dual mandate and we now see the two mandates more in balance than they were a year ago.”

Will the summer housing market see more activity?

Home inventory is up, and mortgage rates have cooled off from the spike we saw in May 2024. Could the Spring rush for home sales end up coming in the summer? Realtor.com looked into the current market and the data points to sunny days ahead.

Realtor.com’s senior economist Ralph McLaughlin stated, “Inventory continues to slowly grow toward normalcy. The decrease in mortgage rates seen in June likely contributed to an increased pace of growth in listing activity. We expect selling activity to continue to normalize as rates inch their way down over the next year.”

Additionally, a recent home sales data report from Realtor.com showed that home inventory is up across the country, and affordable homes are starting to come back into the market. Home sales in the $200,000 to $350,000 range increased by 50% when comparing June 2024 to June 2023.

Home sellers are starting to come back to the market, rates have cooled off, and available inventory is up. Homebuyers that stayed on the sidelines in the Spring may find a much friendlier market in the Summer.

Where do experts think mortgage rates will end 2024 at?

We’re in the second half of the year already, and Newsweek spoke to several experts and took the pulse of industry organizations to get an idea of where they think mortgage rates will end 2024.

First, everyone sees rates cooling off as we head into 2025. Fannie Mae and the National Association of Realtors both have mortgage rates ending 2024 in the 6.7% range. The Mortgage Bankers Association’s most recent projection has rates around 6.6%.

Freddie Mac has the rosiest outlook. Their projection has rates at 6.5% by the end of the year. In their most recent report, they wrote, “Mortgage rates have been volatile over the past month, but we expect rates to remain above 6.5 percent through the end of the year.”

NAR chief economist Lawrence Yun suggested that rate watchers keep an eye on the 10-year treasury bond. He stated, “if the spread between the 10-year Treasury bond yield and the 30-year mortgage rate narrows, then mortgage rates can decline even before the Federal Reserve’s rate cut. But given the uncertain outlook for community and regional banks, the spread is not likely to narrow.”