Blog posted On January 28, 2019
The US partial government shutdown ended last Friday, as the White House and Congress reached a three week spending agreement while they continue to hash out a border security deal. The shutdown had delayed the release of some economic indicators over the past five weeks. This week, the S&P CoreLogic Case-Shiller home price index will come out on Tuesday and the pending home sales index comes out on Wednesday. The Federal Open Market Committee will also meet this week but is not expected to raise the benchmark interest rate.
The Case-Shiller home price index tracks changes in the value of homes involved in two or more sales transactions across twenty major metropolitan areas throughout the country. Home price appreciation started to slow down in 2019, giving home buyers some much needed relief. In October, the Case-Shiller home price index appreciated 0.4% month-over-month and 5.0% year-over-year.
The pending home sales index tracks changes in the number of homes that are under contract but not yet closed. Typically, it takes four to six weeks for a contract to close. In November, pending home sales fell 0.7% month-over-month. An end-of-year rise in mortgage rates slowed some housing activity. A rebound in mortgage application submissions this month, may be a sign of a strong spring housing season ahead.
The Federal Open Market Committee (FOMC) will meet on Tuesday and Wednesday of this week for its first semiannual monetary policy meeting of the year. After raising the benchmark interest rate four times in 2018, the Fed is expected to slow down on interest rate hikes this year. From the minutes, the FOMC officials agreed that “some further gradual increases” would be appropriate, but the Fed can “afford to be patient about further policy firming.”
800,000 federal workers will return to work today. However, the US government may be facing another shutdown if a spending deal on border security is not reached in three weeks’ time. Most types of mortgage loan originations were not impacted by the government shutdown.