Pocketbook issues are at the forefront of the minds of many Americans when paying their monthly bills and looking ahead to Election Day in November.
The chair of the Federal Reserve, Jerome Powell, was on the hot seat in front of a Senate panel Tuesday. His comments were seen as a signal that the Fed is moving closer to cutting interest rates when they meet in September.
“Over the past two years, the economy has made considerable progress toward the Federal Reserve’s 2% inflation goal, and labor market conditions have cooled while remaining strong,” he said. “Reflecting these developments, the risks to achieving our employment and inflation goals are coming into better balance. After a lack of progress toward our 2% inflation objective in the early part of this year, the most recent monthly readings have shown modest further progress. Longer-term inflation expectations appear to remain well-anchored.”
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The Fed rate influences the cost of borrowing — including mortgages. Mortgage rates last week averaged around 6.95%, and with rising home prices, the housing market remains out of reach for many looking to buy.
In Florida, Tampa real estate educator Dutch Mendenhall described how this is making it tough for some on the market for a new home, but for those who own homes, there’s rising equity at play.
“I mean for buying, it’s gonna cause people to have to pay more on their monthly payment and that’s painful for a consumer. So you’re not gonna get the maximum price, you’re not gonna get the maximum value for your property and it makes the time to sell a lot longer,” said Mendenhall.
A recent Redfin report on housing spells out some of what’s going on. The median sales price is $397,954 — that’s up 5% from a year ago and is an all-time high.
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The median monthly mortgage payment was $2,749 in June, and that’s up 6.5% from a year ago.
Metro areas with the biggest price increases are Anaheim, California, Newark, New Jersey and Nassau County, New York.
Another factor that may play into the Fed’s decision is the Consumer Price Index — that’s set to release on Thursday.
Experts say if inflation is holding, it could be a good indicator for the Fed to drop rates this fall.
