Fannie Mae currently expects a quarter-point reduction in December at the earliest, although Duncan stressed that could change between now and next week with the release of its next economic update.
Prospects for the housing market appear to be better this year than 2023, although there’s seemingly no prospect of a big upswing in activity. “We do believe that by the end of the year, when you compare full-year statistics in 2024 to full-year statistics in 2023, you’ll see a slightly higher level of new home sales [and] a slightly higher level of existing-home sales – but it’s not going to be a dramatic shift,” Duncan said.
“It’s going to be a gradual grind upwards over time, and stronger growth will wait for lower rates when the Fed gets comfortable that they’ve locked down inflation to their 2% target.”
What happens if the Fed doesn’t cut rates?
While many expectations earlier in the year centered around multiple rate cuts in 2024, the Fed has stayed the course in the year to date, with its intransigence leading some to speculate that it may leave rates entirely unchanged by the beginning of 2025.
The Fed’s latest so-called “dot plot,” which collects officials’ forecasts on various economic indicators, showed eight officials were expecting two cuts in 2024, with seven envisaging one cut and four anticipating no change.
Source: mpamag.com