Housing is flashing warning signs just as the Fed weighs more interest rate hikes
What happened
- Pending home sales fell 7.3% in September from August and 11.3% year over year, reaching an all-time low in records dating to 2001.
- Housing starts declined 5.2% month over month, while building permits fell 0.2%; single-family permits dropped 4% to 845,000.
- Mortgage rates were 7.43% and could rise further if the Federal Reserve hikes short-term rates, worsening housing affordability.
Why it matters
Weakening housing activity complicates the Federal Reserve’s inflation fight: higher rates may restrain housing further while easing policy could undermine efforts to control persistent price pressures. Market participants should watch the trade-off between mortgage costs, residential investment and expected rate hikes.
What to watch. Markets expect the Fed to hold benchmark rates steady next week, while futures pricing implies a strong chance of a quarter-point hike in December and another in March 2027.
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Timeline
- EarlierOct 19Indonesian Stocks Tumble to Lowest Since 2020 After MSCI Warning
- First reported by CNBCOct 20Housing is flashing warning signs just as the Fed weighs more interest rate hikes
Who is involved
Sources (1)
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