In A Nutshell: Rates remain precarious this week with highly anticipated inflation data coming Wednesday, which could determine if the Fed hikes at their next meeting.
Upcoming Attractions
Wednesday’s CPI print will be the most important data release of the week by a long shot. Odds for a hike at the September 16th’s meeting are currently hovering around 50/50. Even though there will still be one more jobs report and one more CPI report before the meeting, Wednesday’s data could decisively shift the odds. The Fed focuses on core inflation, which excludes the volatile food and energy categories. A reading around 0.2% monthly core inflation (as forecasters expect) would likely give the Fed cover to keep holding, especially after Friday’s weak jobs report. But a print around 0.3% on monthly core inflation could put us on the path to a hike.
On Friday, we will also get retail sales and consumer sentiment data, which will tell us how consumers are feeling and, more importantly, how they are acting. Sentiment has been hovering at historical lows these past few months, but consumers have yet to let up on spending.
Last Week’s Highlights
Last Friday’s jobs report came in significantly weaker than expected. With economic data, the goal is to always try to discern the trend from the noise. Before Friday, a reasonable interpretation was that a weak labor market last fall/winter strengthened into the spring after the Fed cut 75 bps and that the weak June report was an anomaly. After Friday’s data for July, the strength we saw in the spring looks increasingly like a noisy anomaly. Richmond Fed President Tom Barkin noted that the data are “very consistent with how I’ve been seeing the labor market—which is it’s not loose, it’s not tight, it’s sort of in a weak balance.” The tepid, lukewarm, just barely treading water description feels spot on. What does that mean for housing? For starters, perhaps a little relief in the sense that there’s a small likelihood of higher rates. But inflation is a more important determinant of where rates go right now. And a weaker job market generally means less demand for housing conditional on a given level of mortgage rates.
Redfin’s Most Recent Housing Market Reports
- Weekly update: Pending Home Sales Sink to 5-Month Low As Mortgage Rates Rise
- First-Time Buyers Catch a Break As Affordability For U.S. Starter Homes Improves Slightly Faster Than Overall Market
- The Income Needed to Afford Typical American Home Holds Steady Near Record High of $110,000
- Brooklyn’s Park Slope Tops Redfin’s Hottest Luxury Neighborhoods of 2026
