Loan Officer | NMLS #1166673
Branch NMLS #1711540
Posted On October 30, 2017
Mortgage rates trended upward last week, ahead of this week’s Federal Open Market Committee (FOMC) meeting. The FOMC meets Tuesday and Wednesday to discuss monetary policy. The FOMC was in the news last week, as the finance world speculated on what move President Trump will make when Fed Chair Janet Yellen’s term expires in February 2018. The S&P CoreLogic Case-Shiller home price index comes out on Tuesday and US construction spending comes out Wednesday.
The Case-Shiller home price index is based on the value of homes involved in two or more sales transactions across twenty major metros in the United States. Though the data lags by one month, the Case-Shiller home price index is used to evaluate home price trends. The index has been on a steady rise recently, as constrained housing inventory and increased demand drives prices up. In July, home prices appreciated 0.3% month-over-month and 5.8% year-over-year.
US construction spending tracks the total amount spent on private and public construction projects. The construction industry has been stifled recently because of rising materials costs and labor shortages. Recent hurricane damage has slightly stimulated construction as the affected southeastern states rebuild. In August, construction spending increased 0.5% month-over-month and 2.5% year-over-year.
The FOMC meets Tuesday and Wednesday. The Fed is not expected to raise interest rates following this meeting. Despite a tightened job market, inflation has yet to reach the FOMC’s target rate. However, the FOMC is expected to raise rates following the December meeting, to keep with the three rate hikes projection for 2017.
Some analysts believe President Trump will replace Fed Chair Yellen in favor of a pro-deregulation agenda. Others suggest that Yellen’s plan to maintain lower interest rates may be seen as favorable by Trump, who has expressed his support for such policy. Last week, Trump announced he will make his decision on the Federal Reserve Chair soon.