What did the Fed announce yesterday?
The Federal Reserve will keep interest rates where they are for another month, but Chairman Jerome Powell did have a lot to say about where rates could go as soon as September.
Second quarter inflation data has given the Fed confidence that they’re on the right track. Powell stated, “The second-quarter inflation readings have added to our confidence and more good data would further strengthen that confidence.”
When it comes to cutting interest rates, Powell specifically mentioned September as a possibility for the first time. He said, “The question will be whether the totality of the data, the evolving outlook and the balance of risks are consistent with rising confidence on inflation and maintaining a solid labor market. If that test is met, a reduction in our policy rate could be on the table for as soon as the next meeting in September.”
When it comes to the size of the cut, it’s unlikely we’ll see a 50 basis-point rate cut. Powell said, “I don’t want to be really specific about what we’re going to do, but that’s not something we’re thinking about right now.”
Bond and equity markets reacted positively to the news and appeared to be ready to ‘price in’ a September rate cute before it actually happens.
How did mortgage rates react to the Fed?
The national average rate for a 30-year, fixed-rate mortgage dipped 0.10% to 6.70%*. The Fed announcement sent mortgage rates crashing through six-month lows.
The market shrugged off the geopolitical headlines and appeared to focus solely on the announcements from Chairman Powell.
Will these rates stay this low? Could we head lower? Could we see a bounce? Only time will tell.
How is the housing market starting to shift?
A recent article from Fast Company reviewed housing market data from the past month, and found that the housing market is starting to change. What’s happening? The market is seeing a softening in certain areas of the country, while other areas are remaining tight.
The Gulf states and Florida continue to see increases in inventory and the beginnings of a softening in housing prices. However, markets like Chicago, San Diego, and Hartford have remained constricted and home prices have stayed elevated.
We’ve seen a shift from national trends to a more regional housing market. Will homebuyers start flocking back to some of the markets that have cooled? Will markets that have stayed competitive continue on that path? Much like mortgage rates, only the market really knows how the current conditions will evolve.
* National average rates as of 7/31/2024 are included for educational purposes only and are not advertised rates from Rate.
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