current position:Home>The property market "enters winter" ahead of schedule!Economists: The Fed may raise interest rates less than expected in November

The property market "enters winter" ahead of schedule!Economists: The Fed may raise interest rates less than expected in November

2022-09-23 08:22:16Fell in love with cigarettes

In the early hours of Thursday, Beijing time, the Federal Reserve will announce its September interest rate decision.The market has widely expected the Fed to raise interest rates for the third time in a row by 75 basis points to curb high inflation by slowing economic activity.

Although this boot has not yet landed, some Wall Street investment banks have already turned their attention to the interest rate decision in November.

The Federal Reserve's November interest rate policy meeting will be held on November 2-3.The chief economist of Pantheon Macroeconomics believes that with the recent deep correction in the U.S. housing market, it is expected to attract the attention of Fed officials, and the Fed may raise interest rates in November less than investors expected.

The Fed’s sharp interest rate hikes have forced the U.S. housing market into a cold winter

This year, the U.S. 30-year mortgage rate has risen above 6% for the first time since 2008 as the Federal Reserve continues to raise interest rates sharply, and this blow to the US housing market is significant.

On Monday, data from the National Association of Home Builders (NAHB) showed that U.S. homebuilder confidence fell in September, the ninth consecutive month of decline.The U.S. housing market index fell to 46, the lowest level since the spring of 2020, the data showed.

Meanwhile, U.S. home values ​​fell by the most in August since August 2011.Online real estate giant Zillow said in a report that home values ​​fell 0.3% in August after falling 0.1% in a single month in July.Among them, California's San Francisco, Los Angeles and other places saw the largest decline in home values, with a month-on-month decline of more than 3%, and Seattle, Salt Lake City, and San Jose saw a month-on-month decline of more than 2%.

NAHB Chairman Jerry Konter said in the survey results:

“Buyer activity in many markets is weak as high mortgage rates and home prices keep many households unable to buy new homes and spend moreInvestors remain on the sidelines... In this weak market, more than half of builders we surveyed said they had used incentives to boost sales, including mortgage rate buybacks, offering free amenities and cutting pricesEtc."

The cooling of the US housing market may affect the Fed's rate hike path

Ian Shepherdson, chief economist of Pantheon Macroeconomics, believes in the report that the cooling of the US housing market mayimpact on the Fed's monetary policy.He wrote:

“Current market prices are pricing in as high an 80% chance of another 75bps rate hike by the Fed in November. But we think a 50bps rate hike is much more likely.The precarious state of the housing market is a key factor in our forecast.”

The decline in the U.S. housing market index has slowed in recent months, but may remain untouched, Sheppardson believes.bottom.

He explained that real estate and related activities account for less than 10% of U.S. GDP, so the industry may continue to cool down without triggering a wider recession.

However, he also warned that the U.S. housing market is already in a "deep recession" and that the pain will soon spread beyond the real estate sector, with real estate-related retail sales also expected to take a hit.

He warned: "The longer and deeper the housing downturn, the greater the pressure on the Fed to slow the pace of tightening."

This article is from the Financial Associated Press

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