Market Recap: No Rate Hike, Home Price Appreciation Moderate, Pending Home Sales Jump
Posted On July 31, 2020
The Federal Open Market Committee (FOMC) voted to leave the benchmark interest rate unchanged and mortgage rates remain historically low. Home price appreciation was flat month-over-month and slow year-over-year. Pending home sales jumped.
The seasonally adjusted 20-city Case-Shiller home price index was unchanged from April to May. Annually, the index appreciated 3.7%. Despite a national economic slowdown, home prices continue to appreciate, just at a more moderate pace. Phoenix, Seattle, and Tampa led the way with annual gains of 9%, 6.8%, and 6% respectively. Overall, 19 cities saw home price acceleration compared to just 12 cities in April.
The pending home sales index exceeded expectations in June with a 16.6% month-over-month increase. Annually, pending home sales are up 6.3%. Each region showed an increase in contracts signed. The data indicates historically low mortgage rates are continuing to motivate home buyers as they adjust to pandemic-related precautions.
The FOMC voted to keep its key interest rate unchanged at its meeting earlier this week, leaving the federal funds rate at a range of 0-0.25%. Although Fed officials are optimistic about economic recovery, the coronavirus pandemic has caused a lot of uncertainty. In the post-meeting statement, Fed officials wrote, “the path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”
Mortgage rates are expected to stay low through the end of the year as the economy continues to recover from pandemic-related closures and layoffs. Many homeowners, even those who purchased a home in the last couple of years, could benefit from a lower payment with a mortgage refinance. If you have any questions about buying a home or refinancing an existing mortgage, let us know.