Will the Federal Open Market Committee raise the federal funds target rate for the first time in a year? A move by the Fed is widely expected by analysts and economists. The industry will find out when the FOMC makes its announcement on Wednesday, December 14, at 2 p.m. EST.
The most recent Employment Situation from the Bureau of Labor Statistics seems to have nailed it down, with 178,000 jobs added in November and an unemployment rate of 4.6 percent.
Reuters reported on Friday that "There is little doubt that the Fed will raise interest rates for the first time in a year on Wednesday, with markets pricing in a near 100 percent chance for a quarter percentage point increase in its target range." Marketwatch stated that "The Fed is widely expected to announce an increase in the target range for its federal funds rate to 0.5 percent-0.75 percent when its two-day meeting wraps next Wednesday, analysts agree."
Curt Long, Chief Economist with the National Association of Federal Credit Unions, stated that “the report provided no impediments for a rate hike from the Fed later this month, and a quarter-point increase is now a certainty.”
Realtor.com Chief Economist Jonathan Smoke said, "The biggest surprise was the big decline in unemployment. Analysts had been expecting unemployment to stay flat at 4.9 percent—where it had been all summer—but the fall to 4.6 percent was the lowest unemployment rate we’ve seen since August 2007. Since we’re now at what most economists consider to be full employment, any future economic growth could likely lead to higher wages and therefore more inflation, as well as higher rates.”
Mark Fleming, Chief Economist at First American, said, “The gains in wages have been something long awaited by the Fed before increasing rates. All signs indicate that it’s probably time to act in small measure now, as opposed to waiting longer and having to risk more drastic increases later. The housing market is already expecting it.”
HUD/Census Bureau New Residential Construction Report for November 2016, Friday, December 16 at 8:30 a.m. EST
Will housing starts continue their meteoric rise in October’s report? The industry will find out when HUD and the Census Bureau release the New Residential Construction Report for October 2016 on Friday, December 16.
In September, housing starts made significant gains, rising by 25 percent over-the-year and 23 percent over-the-month up to an annual pace of 1.3 million.
David Berson, chief economist at Nationwide, said that housing starts‒‒which are climbing at their strongest pace since 2007‒‒are being driven higher by improved household growth as the economy promotes further job and income gains.
“With improved employment and income prospects,” he said, “millennials are an expanding portion of housing demand as they move out of their parents’ homes‒‒increasingly to form families.”
Trulia Chief Economist Ralph McLaughlin said the increase in starts in September was “statistically significant” but that there was still much room for improvement.
“Controlling for the number of household in the U.S., housing starts are only about 66 percent of their 50-year average,” McLaughlin said.
This week’s schedule
Tuesday, December 13
Quicken Loans National Home Price Perception Index and Home Value Index for November 2016
Wednesday, December 14
Federal Open Market Committee announcement, 2 p.m. EST
Thursday, December 15
NAHB Housing Market Index for December 2016, 10 a.m EST
Friday, December 16
HUD/Census Bureau New Residential Construction Report for November 2016, 8:30 a.m. EST