Author: Eric BernsteinPublished:
The Stock Market has been red hot in 2024. Crypto bulls are back. What does this mean for the housing market?
According to Apollo's chief economist, Torsten Slok, the market has realized that the data is just not slowing down, and the Fed pivot in December (to no more rate hikes) has given an additional tailwind to the economy, financial markets and capital markets, which is why we're seeing such a huge boom in the stock and crypto markets.
Slok boldly predicts that because of this, the Fed will not be in a position to cut rates in 2024.
The good news for homebuyers is that Chief Economists are known for 2 things - making headlines and being wrong. The same day that this prediction was released, the average rate 30-year fixed rate conventional loan FELL and we FINALLY BROKE our losing street - current average sits at 6.845% - down from last week.
According to Apollo's chief economist, Torsten Slok, the market has realized that the data is just not slowing down, and the Fed pivot in December (to no more rate hikes) has given an additional tailwind to the economy, financial markets and capital markets, which is why we're seeing such a huge boom in the stock and crypto markets.
Slok boldly predicts that because of this, the Fed will not be in a position to cut rates in 2024.
The good news for homebuyers is that Chief Economists are known for 2 things - making headlines and being wrong. The same day that this prediction was released, the average rate 30-year fixed rate conventional loan FELL and we FINALLY BROKE our losing street - current average sits at 6.845% - down from last week.
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So, what are the actual decision makers saying?
Several members of the Fed spoke last week.
Last Monday, Federal Reserve Bank of Kansas City President Jeffrey R. Schmid said “The best course of action is to be patient, continue to watch how the economy responds to the policy tightening that has occurred, and wait for convincing evidence that the inflation fight has been won.”
And then after the solid PCE inflation data came out...
Federal Reserve Bank of Atlanta President Raphael Bostic said “The slope of [inflation data] is still going down," and "it will probably be appropriate... to see us start to reduce rates in the summertime.”
Cleveland Federal Reserve President Loretta Mester said "right now, [3 rate cuts in 2024] feels about right to me if the economy evolves as I anticipate it will."
Looks like we are still in for rate cuts this year. The Fed's widely anticipated meeting on March 20th will provide more clarity. While no rate cut is expected, we do expect to get a better sense of when rate cuts may happen.
Personal Consumption Index numbers came in as expected
The personal consumption expenditures price index excluding food and energy costs increased 0.4% for the month and 2.8% from a year ago, as expected. The key here is that we are still under 3%, and as Fed President Bostic mentioned, continues the trend down from 2.9% a month ago. The march towards 2% may be bumpy but the continued progress is important if we want to see rate cuts this year.
The housing market news:
Pending sales data for January FELL by 4.9% month over month. The fear of rates heading back above 7% deterred some buyers. That lower demand is good for less interest rate sensitive buyers hopeful to make a better deal with sellers.
New home sales increase 1.5% in January but that number was slightly less than expected - again thanks to the rise in interest rates.
The Case-Shiller Index for home prices across the 20 largest metro areas in the US reported December data. The 20-city composite posted a year-over-year rise of 6.1%, marking the 7th month of consecutive increases AND it was the FIRST time that all 20 markets tracked by the indices posted year-over-year price increases.
In other news...
US weekly jobless claims are actually rose!! (215k actual vs 210k expected) The labor market is too hot. Jobless claims need to continue to rise in order to show signs of a cooler market.
Fed Chair Jerome Powell testifies to Congress this week on Wednesday and Thursday. Should make for some very good entertainment!
Big week for jobs data - will we see a cooler job market than we've seen the last 2 months?
So, what are the actual decision makers saying?
Several members of the Fed spoke last week.
Last Monday, Federal Reserve Bank of Kansas City President Jeffrey R. Schmid said “The best course of action is to be patient, continue to watch how the economy responds to the policy tightening that has occurred, and wait for convincing evidence that the inflation fight has been won.”
And then after the solid PCE inflation data came out...
Federal Reserve Bank of Atlanta President Raphael Bostic said “The slope of [inflation data] is still going down," and "it will probably be appropriate... to see us start to reduce rates in the summertime.”
Cleveland Federal Reserve President Loretta Mester said "right now, [3 rate cuts in 2024] feels about right to me if the economy evolves as I anticipate it will."
Looks like we are still in for rate cuts this year. The Fed's widely anticipated meeting on March 20th will provide more clarity. While no rate cut is expected, we do expect to get a better sense of when rate cuts may happen.
Personal Consumption Index numbers came in as expected
The personal consumption expenditures price index excluding food and energy costs increased 0.4% for the month and 2.8% from a year ago, as expected. The key here is that we are still under 3%, and as Fed President Bostic mentioned, continues the trend down from 2.9% a month ago. The march towards 2% may be bumpy but the continued progress is important if we want to see rate cuts this year.
The housing market news:
Pending sales data for January FELL by 4.9% month over month. The fear of rates heading back above 7% deterred some buyers. That lower demand is good for less interest rate sensitive buyers hopeful to make a better deal with sellers.
New home sales increase 1.5% in January but that number was slightly less than expected - again thanks to the rise in interest rates.
The Case-Shiller Index for home prices across the 20 largest metro areas in the US reported December data. The 20-city composite posted a year-over-year rise of 6.1%, marking the 7th month of consecutive increases AND it was the FIRST time that all 20 markets tracked by the indices posted year-over-year price increases.
In other news...
US weekly jobless claims are actually rose!! (215k actual vs 210k expected) The labor market is too hot. Jobless claims need to continue to rise in order to show signs of a cooler market.
Fed Chair Jerome Powell testifies to Congress this week on Wednesday and Thursday. Should make for some very good entertainment!
Big week for jobs data - will we see a cooler job market than we've seen the last 2 months?
Key reporting dates this week:
Mon, 3/4: Philadelphia Fed President Tom Harker speaks
Tues, 3/4: Factory orders
Wed, 3/6: ADP employment, Job openings, Fed Chair Jerome Powell testifies to Congress
Thurs, 3/7: Initial jobless claims, Consumer Credit, Fed Chair Jerome Powell testifies to Congress
Fri, 3/8: U.S. unemployment rate
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About the Author:
Eric Bernstein is the President and Co-Founder of LendFriend Mortgage, where he helps homebuyers make smarter, more confident decisions in today’s fast-moving housing market. With over a decade of experience guiding hundreds of clients—from first-time buyers to seasoned investors—Eric brings a mix of market insight, strategy, and personalized service to every mortgage transaction. Each week, Eric breaks down the housing and economic headlines that matter, giving readers a clear, no-fluff view of what’s happening and how it might impact their buying power.