Key Economic Indicators: Fed’s Interest Rate Decision, Home Price Growth, New Home Sales, and Mortgage Rates
In the latest economic update, several significant indicators were reported, including the Federal Reserve’s interest rate decision, the S&P Case-Shiller Home Price Indices, new home sales, and mortgage rates.
Federal Reserve Raises Interest Rates:
Last week, the Federal Reserve announced an increase in its target interest rate range to 5.25 to 5.50 percent. This move signaled that rates for home loans and unsecured credit would also experience a rise.
Slower Home Price Growth in May:
According to the S&P Case-Shiller 20-City Home Price Index, average U.S. home prices experienced a slight decline in May. The decrease was -1.70 percent, which was slightly better than the expected -1.90 percent drop and the previous month’s reading of -1.70 percent. Notably, the top three cities with the highest year-over-year home price growth were Chicago, Illinois, with a growth rate of 4.60 percent, Cleveland, Ohio, with a growth rate of 3.90 percent, and New York City, where home prices rose by 3.50 percent.
Previously Owned Home Sales Decline:
The sales of previously owned homes decreased due to high demand and limited housing supply. While some homeowners held off on selling their homes in anticipation of lower mortgage rates, prospective buyers were not deterred by the rising rates, which approached 7 percent recently.
New Home Sales also Affected:
New home sales in June fell to a seasonally adjusted annual pace of 697,000 sales, below analysts’ estimates of 725,000 sales and May’s reading of 715,000 new home sales. The challenges of affordability, stemming from higher home prices in popular metropolitan areas and increasing mortgage rates, particularly affected first-time and moderate-income home buyers.
Mortgage Rates Continue to Rise:
Freddie Mac reported that mortgage rates increased for the fourth consecutive week. The average rate for 30-year fixed-rate mortgages rose by three basis points to 6.81 percent, while the average rate for 15-year fixed-rate mortgages was five basis points higher at 6.11 percent.
Jobless Claims Decrease:
On a positive note, first-time jobless claims fell to 221,000 claims, a decline from the previous week’s reading of 228,000 claims filed.
Upcoming Economic Reports:
Looking ahead, this week’s economic reporting will include data on construction spending, public and private-sector payrolls, and the national unemployment rate. Additionally, weekly readings on mortgage rates and first-time jobless claims will be released, providing further insights into the current economic landscape.
