Driving It Home with ABoR's Housing Economist | June 21, 2023
Channel: Austin Board of REALTORS®
Date: 2023-06-21

Inflation continued to decelerate last month—in May, headline inflation moderated to +4% YoY and +0.1% MoM, while core inflation—which strips the more volatile categories of food and energy—measured +5.3% YoY and +0.4% MoM. However, inflation remains well above the Federal Reserve's long-term target of 2%. The Federal Open Market Committee, or FOMC, opted to pause its rate hike cycle, although at least one—if not potentially two—more rate hikes to the tune of 25 basis points each prove likely amid stubbornly high inflation and a still-robust labor market. The majority of FOMC participants signaled that the Fed funds rate, which currently hovers between 5% and 5.25%, will need to reach between 5.5% and 5.75% before monetary policy is sufficiently tight. In the wake of the Fed’s decision, mortgage rates remained steady, ending last week at an average of 6.69%. That’s down slightly from a recent high of 6.79%, but still elevated. Until economic activity declines or the Fed signals sufficient price stability, it's unlikely that mortgage rates will meaningfully decrease.

On a week-over-week basis, pending sales ticked up 5% in the Austin-Round Rock-Georgetown MSA, while closed sales rose over 50%. The latter is a lingering effect of the Memorial Day holiday. (Some buyers who otherwise would have closed the week of May 22-28 opted to delay closing until after the Memorial Day holiday. This resulted in an uptick in closings the week of May 29-June 4, but a decline in closings the week of June 5-11 as the post-Memorial Day surge in activity slowed.) Meanwhile, active listings held steady, but new listings declined nearly 10%.

Don't forget that Dr. Losey will present the Buy vs. Rent Index at the upcoming Central Texas Housing Summit on July 26. Don't miss it–save your spot here: https://www.abor.com/event-type/central-texas-housing-summit

Download the Audio Transcript + Episode Summary: https://www.abor.com/content/uploads/2023/06/DIH-6-21-2023.pdf

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