The September 18 week includes the FOMC meeting on Tuesday and Wednesday and release of the FOMC statement and update to the Summary of Economic Projections (SEP) at 14:00 ET on Wednesday. Jerome Powell’s press conference will begin at 14:30 ET on Wednesday. At this writing, it seems a safe bet that the FOMC will hold rates steady at this meeting. What is in question is how the quarterly update to the SEP will shape up. It seems probable that the median forecast by Fed policymakers will continue to allow for at least one more rate hike in 2023. What may be more interesting is any revisions to the forecasts for 2024 and 2025. Recent comments from various Fed officials indicate that they do not see the fight against entrenched inflation as won. Even if there are no more increases in rates, the expectations are that current restrictive policy will remain in place for some time yet.
Much of the week’s economic data will focus on the housing sector. The Freddie Mac weekly report shows that the 30-year fixed rate has topped 7 percent since mid-August, and seems to be holding there. The present interest rate for mortgages is a disincentive for homebuyers. Additionally, those in the market for a home are facing limited supply and not a lot of give in prices. While lean existing housing stock means homebuilders will continue to find conditions favorable, some potential buyers are exiting the market. Others may opt for an adjustable-rate mortgage to improve initial affordability. But whether using a fixed- or adjustable-rate mortgage, buyers will be on the lookout for an opportunity to refinance at a lower rate.
Most of the housing data will be for August. Some of the homebuyers who closed a deal in August will have pre-qualified for a mortgage at a lower rate and may have hurried to buy before losing a more favorable interest rate. The real indication of the state of the housing market will be the NAHB/Wells Fargo housing market index for September at 10:00 ET on Monday. The index fell 6 points to 50 in August and is likely to see another few points shaved off in September. The current pace of sales may not be down too much, but expected sales and buyer traffic should be weakened by mortgage rates at over 20-year highs.