What does this mean for the economy and interest rates through the end of 2023?
Yesterday the FOMC announced that they would hold their benchmark interest rate for the second straight meeting. This announcement leaves rates at the same level since July of 2023, with only one rate increase since May of 2023. Prior to May, the FOMC had increased it’s benchmark rate at every meeting for nearly a year.
The FOMC left the possibility for more rate hikes on the table however as they gauge the impact of their benchmark rate on the economy. It was noted during the meeting that the economy has not felt the full effect of their interest rate increases and they want to give themselves time to assess the full impact before deciding to adjust the rate further.
This comes as a sigh of relief for many as the tone surrounding the meeting was more favorable to the economy than in previous meetings over the last few months. It is of course uncertain and no guarantee that rates won’t increase again in the near future, the overall outlook was more positive.
The Real Estate market has certainly felt the effects of the interest rate increases and overall sales statistics are relatively flat compared to this time last year. The largest indicator of market health to note is the lack of home inventory. As interest rates have risen the number of available homes for sales has plummeted to historical lows. With very little to choose from on the market, buyers are pressed to find affordable homes.
Homes that are listed for sale however are accumulating a higher days on market than in years prior. Throughout 2020 – 2022 homes were on market an average of just 3-4 days, even less in some areas. Today, the average days on market is closer to 15 – 20 as the number of active buyers has dropped proportionately to the number of listings.
Overall, market values in our area are holding relatively still with very little change in values from the beginning of the year to now. It can be expected that when rates do begin to drop, hopefully in the first or second quarter of next year, we’ll see a wave of listings and buyers returning to the market and a return to overall market growth and appreciation.
Only time will tell of course, but it’s refreshing to see positivity returning to the economic outlook.