Fed not likely to increase interest rates "until December or later"

There are only three meetings left this year for the Federal Open Market Committee, and the likelihood they’ll raise interest rates above current levels looks slim, judging by the latest meeting minutes released on Wednesday.

National Association of Federal Credit Unions Chief Economist Curt Long explained that the FOMC minutes continue to reflect divisions within the committee.

“The constant refrain of 'data dependency' from Fed officials loses its meaning when there is no consensus on what the data means, much less which policy course is warranted,” said Long.

“Nevertheless, it seems safe to say that many of the committee’s fears were alleviated with the strong June jobs report and by Brexit’s lack of impact on financial markets,” he said. “With inflationary pressures yet to emerge, the Fed seems happy to play the waiting game as far as rate normalization is concerned.”

Long concluded that as a result, they “anticipate no rate hike until December or later.”

Genworth Mortgage Insurance Chief Economist Tian Liu also noted that today’s release of the FOMC minutes came after the strong job market report in July and diminished volatility in the financial market. 

“We believe the FOMC will continue to pay close attention to incoming economic data, especially the August jobs report.  For the 30-year mortgage rate, the pace of future rate increases is more important than the timing of the next rate increase, and today’s minute does not indicate an acceleration.”  

The minutes did shed some light on the committee’s thoughts surrounding Brexit stating:

Overall, negative sentiment surrounding the Brexit out- come early in the intermeeting period was subsequently alleviated by expectations for greater policy accommodation in some AFEs, some resolution of near-term political uncertainty in the United Kingdom, and positive U.S. economic data releases. Nevertheless, several longer-term global risks related to Brexit remained.

However, the minutes mostly reiterated much of the same information the market already knows.

From the minutes:

With respect to the economic outlook and its implications for monetary policy, members continued to expect that, with gradual adjustments in the stance of monetary policy, economic activity would expand at a moderate pace and labor market indicators would strengthen.

Directly after the meeting in July, the FOMC announced it choose to keep the federal funds rate between 0.25% and 0.5%, which is the same level as when the Fed originally announced it would raise rates back in December.

Courtesy of Brena Swanson Housing Wire:  http://www.housingwire.com/articles/37809-fed-not-likely-to-increase-interest-rates-until-december-or-later?eid=311685553&bid=1501400

Home Price Gains Continue in Most U.S. Metros in Mid-2016

According to the latest quarterly report by the National Association of Realtors, U.S. home prices maintained their robust, upward trajectory in a vast majority of metro areas during the second quarter, causing affordability to slightly decline despite mortgage rates hovering at lows not seen in over three years. The report also revealed that for the first time ever, a metro area - San Jose, California had a median single-family home price above $1 million.

The median existing single-family home price increased in 83 percent of measured markets, with 148 out of 178 metropolitan statistical areas (MSAs) showing gains based on closed sales in the second quarter compared with the second quarter of 2015. Twenty-nine areas (16 percent) recorded lower median prices from a year earlier.

There were slightly fewer rising markets in the second quarter compared to the first three months of this year, when price gains were recorded in 87 percent of metro areas. Twenty-five metro areas in the second quarter (14 percent) experienced double-digit increases - a small decrease from the 28 metro areas in the first quarter. A year ago, 34 metro areas (19 percent) experienced double-digit price gains.

Lawrence Yun

Lawrence Yun, NAR chief economist, says a faster pace of home sales amidst languishing inventory levels pushed home prices higher in most metro areas during the second quarter. "Steadily improving local job markets and mortgage rates teetering close to all-time lows brought buyers out in force in many large and middle-tier cities," he said. "However, with homebuilding activity still failing to keep up with demand and not enough current homeowners putting their home up for sale, prices continued their strong ascent - and in many markets at a rate well above income growth."

The national median existing single-family home price in the second quarter was $240,700, up 4.9 percent from the second quarter of 2015 ($229,400), which was previously the peak quarterly median sales price. The median price during the first quarter of this year increased 6.1 percent from the first quarter of 2015.  

Courtesy of World Property Journal:  http://www.worldpropertyjournal.com/real-estate-news/united-states/san-jose/median-home-prices-2016-national-association-of-realtors-lawrence-yun-existing-home-sales-housing-inventory-2016-nar-9981.php