Good Monday Morning!
Fed Chair Warsh emphasized the need for continued progress on inflation but stopped short of committing to a September rate hike. Albeit he did open the door for that to become a possibility. Housing data showed home prices holding up even as sales slowed. Let’s get into it!
- Warsh Signals Inflation Remains Top Concern
- New Home Sales Slow in July
- Home Prices Continue to Rise Nationally
- Weekly Rate Recap and What to Expect This Week
Warsh Signals Inflation Remains Top Concern
Kevin Warsh’s first speech at Jackson Hole Economic Symposium was a major focus for markets on Friday. Going into the meeting, not much was expected as Warsh has repeatedly said the days of the Fed communicating their next move, known as forward guidance, are gone. Instead, Warsh would prefer the Fed make decisions based on economic data without the markets (stocks and bonds) over-reacting to every word or headline coming out of Fed Meetings. If there was one take away for us from the Symposium though, it was this — Warsh made it clear that getting inflation back to sub-2% levels is the top priority. We’ve known that’s important but there was a distinction here worth noting going forward — the Fed is going to be hyper focused on inflation, almost regardless of how the economy is doing.
The Fed has a dual mandate: maintain price stability (inflation) and promote monetary policies that support job growth. That second mandate is going to take a backseat to inflation which is why a Fed Rate hike was a topic of conversation.
His speech came after two important inflation reports were released on Wednesday. Core Personal Consumption Expenditure (PCE — inflation at consumer level) rose 0.2% for the month, with the annual core inflation rate remaining at 3.3%. While Warsh acknowledged some recent progress on inflation, he said the underlying trend hasn’t shown enough sustained improvement. He stressed that if inflation doesn’t make meaningful progress toward the Fed’s 2% target, there is still “work to do.” This “work” comment keeps the possibility of a rate hike on the table, but he stopped short of committing to one at the next meeting; not because it couldn’t happen, but because the Fed is no longer going to tell the markets what’s coming ahead of time.
If you’d like to read more about the meeting, you can check out this article I wrote on Friday — What Fed Chair Kevin Warsh Actually Said at Jackson Hole
New Home Sales Slow in July
New home sales fell 10.5% from June to July which was below expectations. Compared to a year ago, July sales were down 6.3%.
Sales increased in the Northeast and West but fell 43% in the Midwest and 13% in the South. Because the report is based on signed contracts, not closings, the July results provide a snapshot of buyers’ activity during the month. Builders reported 488,000 new homes sitting for sale at the end of July, which marks 9.6 months of supply at current sales pace. For traditional sellers, this shouldn’t be interpreted as a competitor to your listing disappearing; it’s builders still needing to move a product which is why we see so many of them offering rate buydowns, closing costs assistance, and upgrades instead of waiting for the market to naturally come to them. For comparison, existing homes on the market are sitting at a 4.6-month supply nationally — less than half of what builders have out there. Either way, some markets are squarely in favor of a buyer for the time being with elevated inventory.
Home Prices Continue to Rise Nationally
The median existing-home price in July came in at $434,100, up 2% from July 2025, which NAR flagged as the 37th straight month of year-over-year gains. Case-Shiller, which follows the same houses over time rather than whatever mix sold last month, also rose 1.5% year over year through June. That is slower appreciation than the frenzy years, and it is not uniform from metro to metro, but nationally it is still appreciation. Equity still matters for a seller who is also a future buyer, and for a homeowner who is weighing a cash-out or a HELOC against keeping the payment they already have. What I would not tell anyone this week is “buy now or never.” Prices can keep grinding higher in some zip codes and flatten in others; the useful question is whether this house, at this payment, fits the household, not whether a national median just printed another modest gain.
Weekly Rate Recap and What to Expect This Week
The week ahead is packed with Jobs data and as we just discussed, it may not come with the full weight that it usually does, given Warsh’s comment. The Fed appears to be content with the job market as-is with mediocre job growth and the unemployment rate at just 4.1%. It will be interesting to see how the market absorbs Job Openings on Tuesday, private sector payrolls on Wednesday, weekly jobless claims on Thursday, and the closely watched employment report on Friday which will include nonfarm payrolls and the unemployment rate. Meanwhile, I’d expect geopolitical news that influences energy prices to sway rates more. As we’re seeing this morning, oil prices are putting pressure on the 10-year UST which has broken above a key ceiling of resistance of 4.75% — not a good technical signal for mortgage rates if that holds for a couple days.
As of Friday afternoon, mortgage rates rose to the third highest level/day of the year (6.81% on Friday, 6.83% on 7/31, and 6.85% on 7/23). Remember that these rates published on MortgageNewsDaily is a product of numerous lenders best advertised rates (often with points), for the most well-qualified buyer/refi. With smaller down payments or less than stellar credit, it is possible to see rates over 7% for a Conventional buyer even today. If you’re considering a rate lock anytime soon, keep a very close eye on the 10 YR US Treasury. If that gets comfortable above 4.75%, rates will naturally gravitate higher in the coming days.
Source: Mortgage News Daily
I hope you enjoyed this week’s content. As always, please don’t hesitate to reach out if you have any questions!