Pocketbook concerns are at the forefront of the thoughts of many Americans as they pay their monthly bills and look ahead to Election Day in November.
The chair of the Federal Reserve, Jerome Powell, faced tough questions from a Senate panel on Tuesday. His remarks were viewed as a sign that the Fed is leaning towards lowering interest rates at their September meeting.
“Over the past two years, the economy has made significant progress towards the Federal Reserve’s 2% inflation target, and labor market conditions have weakened but remain strong,” he stated. “Reflecting these developments, the risks of achieving our employment and inflation goals are becoming more balanced. Despite a lack of progress towards our 2% inflation target earlier this year, recent monthly data has shown modest improvements. Long-term inflation expectations seem to be well-anchored.”
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The Fed’s rate impacts borrowing costs, including mortgages. Mortgage rates averaged around 6.95% last week, and with escalating home prices, the housing market remains unattainable for many prospective buyers.
In Florida, Tampa real estate educator Dutch Mendenhall explained how this is creating challenges for those in the market for a new home. However, for existing homeowners, there is increasing equity.
“For buyers, it will result in higher monthly payments, which can be difficult for consumers. This means you may not get the best price or value for your property, and selling may take longer,” Mendenhall noted.
A recent Redfin report on housing details some of the current trends. The median sales price is $397,954, up 5% from a year ago and reaching an all-time high.
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The median monthly mortgage payment was $2,749 in June, a 6.5% increase from the previous year.
Metro areas with the largest price hikes include Anaheim, California, Newark, New Jersey, and Nassau County, New York.
Another factor that could influence the Fed’s decision is the upcoming release of the Consumer Price Index on Thursday.
Experts suggest that if inflation remains steady, it could be a positive sign for the Fed to lower rates this autumn.
