Market Forecast: Case-Shiller Home Price Index, Pending Home Sales Index, and Federal Open Market Committee Meeting
The Federal Open Market Committee (FOMC) will meet on Tuesday and Wednesday of this week, and a rate cut is widely expected. Federal Reserve Chair Jerome Powell will host a press conference at 2:30 ET on Wednesday. In housing news, the S&P CoreLogic Case-Shiller home price index and the pending home sales index will both be released on Tuesday.
The Case-Shiller home price index tracks month to month changes in the value of homes that have been involved in two or more sales transactions across twenty major metropolitan areas throughout the country. In April, the Case-Shiller home price index was unchanged month-over-month and up 2.5% year-over-year. Home price appreciation overall has started to slow down. After a pricy few years, some home buyers may be getting a break in their area.
The pending home sales index tracks homes that are under contract but not yet closed. The pending home sales index is used to predict future housing market activity like existing home sales. In May, the pending home sales index increased 1.1% year-over-year, driven by gains in the Northeast and Midwest. Only the West declined. With mortgage rates historically low, many home buyers previously priced out of the market are making moves.
The FOMC meets on Tuesday and Wednesday of this week and a rate cut is expected. In its Beige Book survey earlier this month, the Fed cited more modest economic expansion plus trade tensions, which could mean a rate cut is warranted. If the Fed does vote for a rate cut, mortgage rates will likely react by trending lower. Mortgage rates have been on an opposite trajectory than they were last year. After climbing most of 2018, mortgage rates have continued to fall for most of 2019.
With lower mortgage rates and slower home price appreciation, this could be the opportune time for home buyers who were previously priced out of the market to buy a home. If you’re considering a home purchase this year, get preapproved for mortgage financing first. Get a realistic idea of your budget and down payment requirements and be prepared to make an offer.
Sources: Econoday, HousingWire, MarketWatch, MarketWatch, Mortgage News Daily, Reuters