The central bank also indicated further cuts are expected at its final two meetings of the year. The federal funds rate is the Fed’s primary tool for managing inflation and unemployment. In August, existing-home sales fell by 2.5% month-over-month and 4.2% year-over-year, while the median existing home price reached a record high for any August. Single-family starts saw a significant increase, rising 15.8% over the previous month and 5.2% year-over-year, with a year-to-date increase of 10.4%. Builder confidence improved by two points in September, ending a four-month decline, according to the National Association of Home Builders Housing Market Index (HMI). Below are key events from the third week of September impacting our business: FED SLASHES INTEREST RATES BY A HALF POINT, AN AGGRESSIVE START TO ITS FIRST EASING CAMPAIGN IN FOUR YEARS. The Federal Reserve on Wednesday enacted its first interest rate cut since the early days of the Covid pandemic, slicing half a percentage point off benchmark rates in an effort to head off a slowdown in the labor market. Outside of the emergency rate reductions during Covid, the last time the FOMC cut by half a point was in 2008 during the global financial crisis. The decision lowers the federal funds rate to a range between 4.75%-5%. In addition to this reduction, the committee indicated through its “dot plot” the equivalent of 50 more basis points of cuts by the end of the year. “We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation. That’s what we’re trying to do, and I think you could take today’s action as a sign of our strong commitment to achieve that goal,” Chair Jerome Powell said at a news conference following the decision. Read the full story here.EXISTING-HOME SALES DIPPED 2.5% IN AUGUST. Existing-home sales fell in August, according to the National Association of REALTORS. Total existing-home sales descended 2.5% from July to a seasonally adjusted annual rate of 3.86 million in August. Year-over-year, sales retracted 4.2% (down from 4.03 million in August 2023). Total housing inventory registered at the end of August was 1.35 million units, up 0.7% from July and 22.7% from one year ago (1.1 million). Unsold inventory sits at a 4.2-month supply at the current sales pace, up from 4.1 months in July and 3.3 months in August 2023. The median existing-home price for all housing types in August was $416,700, up 3.1% from one year ago ($404,200). Properties typically remained on the market for 26 days in August, up from 24 days in July and 20 days in August 2023. Read the full story here.SINGLE-FAMILY STARTS UP IN AUGUST BUT SUPPLY-SIDE ISSUES LINGER. Single-family starts posted a solid gain in August on robust demand and moderating mortgage rates even as builders continue to grapple with challenges related to lot and labor shortages and elevated prices for many building materials. Overall housing starts increased 9.6% in August to a seasonally adjusted annual rate of 1.36 million units. Within this overall number, single-family starts increased 15.8% to a 992,000 seasonally adjusted annual rate. On a year-over-year basis, single-family starts are up 5.2% compared to August 2023. On a year-to-date basis, single-family starts are up 10.4%. The total number of single-family homes and apartments under construction was 1.5 million in August. This is the lowest total since November 2021. Total housing units now under construction are 11.1% lower than a year ago. Single-family units under construction fell to a count of 642,000 – down 5.2% compared to a year ago. Overall permits increased 4.9% to a 1.48-million-unit annualized rate in August. Single-family permits increased 2.8% to a 967,000-unit rate. Read the full story here.
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