Decline in US Housing Sector Anticipated Prior to Federal Interest Rate Announcement
The U.S. Federal Reserve is poised to make a move in response to increasing risks to the labor market, with Chair Jerome H. Powell signaling a potential loosening of monetary policy. The upcoming Fed meeting, scheduled for 20:00 CEST, has economists anticipating a quarter-point cut in mortgage rates.
According to the U.S. Department of Commerce, the number of building permits decreased by 3.7% in August, with an annualized number of 1.312 million. This decrease was compared to the previous month and was also lower than the economists' expected 1.370 million building permits.
The decrease in newly started residential units was also notable, with a drop of 8.5% in August. The annualized number of newly started residential units stood at 1.307 million, a difference of 62,000 from the expected number. The revised number of newly started residential units in July was 1.429 million.
High mortgage rates have been making real estate transactions more challenging, and the potential mortgage rate cut would be within the range of 4.0 to 4.25 percent. If the expected cut occurs, the new mortgage rate range would be 4.0 to 4.25 percent.
The Fed's potential mortgage rate cut is expected to be a response to increasing risks to the labor market. Chair Powell cited these risks as a reason for the potential loosening of monetary policy.
It's important to note that, as of the time of this article, the U.S. Federal Reserve has not adjusted the mortgage rate this year. The upcoming Fed meeting will provide clarity on whether this will change.
This news comes as economists polled by Reuters had expected 1.365 million newly started residential units in August. The actual number of building permits, however, fell short of this expectation.
In conclusion, the U.S. Federal Reserve is expected to lower mortgage rates in response to increasing risks to the labor market. The upcoming Fed meeting, scheduled for 20:00 CEST, will provide insight into whether this will indeed occur.
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