11/24/2023 – MetroIntelligence Economic Update by P. DUFFY

MetroIntelligence Economic Update by P. DUFFY

October existing home sales fall 4.1 percent to 13-year low

Existing-home sales descended 4.1% in October to a seasonally adjusted annual rate of 3.79 million. Sales slumped 14.6% from one year ago to a 13-year low due to low inventory and affordability. The median existing-home sales price climbed 3.4% from one year ago to $391,800 – the fourth consecutive month of year-over-year price increases. The inventory of unsold existing homes grew 1.8% from the previous month to 1.15 million at the end of October, up 1.8% from September but down 5.7% from one year ago.  This inventory is equal to 3.6 months’ supply at the current monthly sales pace, up from 3.4 months in September and 3.3 months in October 2022.


October Leading Economic Index falls by another 0.8 percent

The US Leading Economic Index (LEI) trajectory remained negative, and its six- and twelve-month growth rates also held in negative territory in October. The U.S. LEI fell by 0.8 percent in October 2023 to 103.9 (2016=100), following a decline of 0.7 percent in September. The LEI contracted by 3.3 percent over the six-month period between April and October 2023, a smaller decrease than its 4.5 percent contraction over the previous six months (October 2022 to April 2023). Among the leading indicators, deteriorating consumers’ expectations for business conditions, lower ISM® Index of New Orders, falling equities, and tighter credit conditions drove the index’s most recent decline.


November consumer sentiment falls another 3.9 percent, but up 8.1 percent year-on-year

Consumer sentiment fell a modest 2.5 index points, or 3.9%, from October. While this marks the fourth consecutive month of declines, November’s reading reflects a balance of factors, some of which improved while others worsened. More-favorable current assessments and expectations of personal finances were offset by a notable deterioration in expected business conditions. In particular, long-run business conditions plunged by 15% to its lowest since July 2022. Younger and middle-aged consumers exhibited strong declines in economic attitudes this month, while sentiment of those age 55 and older improved from October.


Federal Reserve meeting minutes shows it’s holding firm until inflation is lower

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.