As mortgage rates continued to rise in August 2022, the Jackson Hole Economic Symposium took place. For the unacquainted, the Federal Reserve hosts this annual three-day conference, discussing the country’s economic challenges and overall direction.
Unfortunately, this latest event came as the United States real estate market heads for a downturn. In the face of rising mortgage rates, limited housing inventory, and sluggish new construction, housing challenges persist.
Jackson Hole Economic Symposium Mentions “Some Pain”
With the first in-person event since 2020, Federal Reserve Chair Jerome Powell gave his annual address at the Jackson Hole Economic Symposium. In his comments, Powell discouraged a lighter approach to inflation, warning of worse consequences than that of tighter monetary policy. All the same, Powell did mention that tightening monetary policy includes “some pain” for households and businesses.
Furthermore, Powell repeated the Federal Reserve’s approach to tightening monetary policy. Overall, the Federal Reserve reflects on incoming economic data prior to confirming rate hikes. Despite this sentiment, Powell failed to provide additional insights. This left investors questioning whether the September 21st meeting would see a 50 or 75-basis point hike to the federal funds rate.
Real Estate Market Experiences Downturn as Mortgage Rates Soar
Aside from last month’s Jackson Hole Economic Symposium, the real estate market received more unwelcome news. As mortgage rates rose by the end of August 2022, new construction contracts saw numerous cancellations, roughly 16%.
For the sixth month in a row, sales of existing homes fell 20% lower year-over-year, hitting their slowest pace since May 2015 (excluding the drop at the beginning of the COVID-19 pandemic). Despite the drop in sales, the median existing-home price jumped 11% higher than last year, achieving a new record of $403,800.
Unfortunately, inventory levels sit at a 3.3-month supply, indicating more buyers than sellers. With the lengthy inventory problem, housing starts did little to help, decreased 10% from June to the lowest level since June 2020.
Real Estate Outlook After Jackson Hole Economic Symposium
After last month’s Jackson Hole Economic Symposium, the real estate market remains extremely competitive for prospective home buyers. As mortgage increased by the end of August, affordability grows worse. However, the Federal Reserve intends to prevail with its aggressive stance on inflation.
For insight on the latest mortgage rates, contact the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.
Please note: The safety of our staff and clients is our highest priority. Effective immediately, Plymouth Title Guaranty Corp. will be taking the following precautions to limit the spread of the COVID-19 virus:
All purchase transactions need to take place at a Plymouth Title Guaranty Corp. closing office.
- If a party to the closing is not feeling well, please contact your closer before the closing so appropriate precautions can be taken.
- We ask visitors to utilize the restroom in our building upon arrival to thoroughly wash their hands before entering our office.
- Only individuals required to sign and/or deliver documents at closings will be allowed in our office. Specifically, closings will be limited to borrower(s), seller(s), agents, and lenders.
- All pens used in the closing will be given to the client after use.
- All closing rooms will be cleaned and disinfected in-between each closing.
- Those picking up checks at our office will be instructed to call our main line and request to speak to a staff member who will plan for delivery to the lobby or parking lot of our office.
- All staff will refrain from shaking hands before or after closings and ask clients to do the same.
Please be advised that our staffing may be impacted during this unprecedented event. While we are committed to continuing to provide outstanding service, we ask for your patience in the face of this pandemic.