Existing Home Sales fell in August, Home Prices continue to rise, Fed Funds Rate unchanged
September 22, 2016
Thursday – September 22
The National Association of REALTORS® (NAR) reported on Thursday that August Existing Home Sales fell 0.9% from July to an annual rate of 5.33 million units, below the 5.50 million expected. The NAR said that despite low mortgage rates, higher prices and low inventories kept buyers on the sidelines. Sales were up 0.8% from August 2015. Lawrence Yun, NAR chief economist, said, “Hopes of a meaningful sales breakthrough as a result of this summer’s historically low mortgage rates failed to materialize because supply and affordability restrictions continue to keep too many would-be buyers on the sidelines.” Home prices continued to rise across the country in July. The Federal Housing Finance Agency (FHFA) reported that home prices rose 0.5% from June according to its Home Price Index . From July 2015 to July 2016, prices were up 5.8%. The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.
The Federal Reserve left its benchmark short-term Fed Funds Rate rate unchanged at the 0.25 – 0.50 range yesterday, but left the door open for a rate hike this year. If the Fed were to raise rates, it would most likely come at the December Federal Open Market Committee meeting. The vote was 7-3 with the three dissenters wanting to edge the Fed Funds Rate higher by a quarter percent. The statement read that job gains have been solid, household spending has been growing strongly, however, business investments have remained soft. In addition, inflation continues to run below the Fed’s 2% objective, while the Federal Funds Rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.