What the Fed said… Everyone expected the Fed to skip a rate hike at the Sept 20 meeting, and that’s exactly what happened. What caught the market by surprise was ‘higher for longer’ commentary from Chairman Powell, as well as Fed member forecasts for an additional rate hike this year and only 2 rate cuts by end-2024. The Fed wants 2% core inflation, and Powell definitely thinks they’ve stuck the ‘soft landing’.
…the market didn’t like The Fed is now forecasting stronger GDP growth, lower unemployment rates, more rate hikes, and later rate cuts. These are all things that the bond market doesn’t like to hear. After two days of carnage in the Treasury and Mortgage Backed Securities market, average 30-yr mortgage rates are back at 7.47% – very near recent peak levels. Affordability remains a major challenge for buyers.
Existing home sales slow On a seasonally-adjusted, annualized basis, just over 4 million existing homes were sold in August 2023. That’s roughly 1% below last month, but 15% below August 2022. Median sales prices, however, edged slightly higher month-over-month to $407,000 (!!!), which is up nearly 4% year-over-year. Low inventory and elevated mortgage rates continue to crimp transactions.
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