Redfin Economists’ Weekly Take: Fed Speeches May Offer Clues About Future Rate Cuts

Last Week In A Nutshell 

Mortgage rates inched up as the Fed presented a murky view of rate cuts for the next two meetings, while multiple economic data reports came in stronger than expected.

Upcoming Attractions 

This week should be fairly quiet for rates as the PCE release doesn’t usually move markets, but there will be plenty of Fedspeak to analyze.

• Macroeconomic data:
  • Durable goods (Thursday) – Expected to decline modestly due to fewer commercial aircraft orders. Core capital goods expected to remain flat following a small increase last month.
  • PCE inflation (Friday) – Core PCE expected to increase by 0.2% month over month in August following a 0.3% read for July. Annually, core PCE is expected to remain at 2.9%. This is the inflation measure the Fed uses, but it rarely moves markets as the components come from the CPI and PPI data released earlier in the month.
• Housing data:
  • • New home sales (Wednesday) – New home sales are expected to fall about half a percent in August, but this data series has been historically volatile and only captures contract signings.
    • Existing home sales (Thursday) – Redfin expects an increase of less than a percentage point from July to 4.05m seasonally adjusted at an annual rate.
• Fed speakers: With the Fed out of its blackout period, there is a crowded schedule of Fed speakers this week. The remarks will be analyzed for clues about the potential for rate cuts at the October and December meetings. Rates may move if any of the more influential members suggest a path that deviates from what the Fed projected last week.
  • • • Monday: New York Fed President Williams, St Louis Fed President Musalem, Cleveland Fed President Hammack, Richmond Fed President Barkin, Fed Governor Miran
      • Tuesday: Fed Vice Chair Bowman, Atlanta Fed President Bostic, Fed Chair Powell
      • Wednesday: San Francisco Fed President Daly
      • Thursday: Chicago Fed President Goolsbee, New York Fed President Williams, Kansas City Fed President Schmid, Fed Vice Chair Bowman, Fed Governor Barr, Dallas Fed President Logan, San Francisco Fed President Daly
      • Friday: Richmond Fed President Barkin, Fed Vice Chair Bowman

Last Week’s Highlights

• Fed meeting – The Fed cut by 25 bps as anticipated and projected two more rate cuts for the next two meetings, but a change in the jobs and inflation data could easily pivot them back to no cuts. On the whole, however, given the direction of economic data, the base case seems to be that the jobs data will continue to weaken and inflation will remain milder than feared, paving the way for cuts at the October and December meetings. These cuts are almost entirely priced in already, limiting how much room there is for rates to fall if they come to fruition. Conversely, if the economic data make it impossible to execute these cuts, rates will rise significantly.
• Macroeconomic data – A series of economic data prints last week came in stronger than expected, with retails sales leading the way. Core retail sales increased 0.7% from a month ago against expectations for a 0.4% increase. Industrial production increased by 0.1% in August instead of declining as expected. And, finally, jobless claims reverted back to 231,000 after the prior week’s spike was discovered to be based on fraudulent claims.
• Housing data
  • NAHB housing market index – Held steady at 32 in September, matching August and June’s level which were the lowest since December 2022.
  • Housing starts and building permits – Housing starts declined by 8.5% in August, more than expected. Multi-family housing starts declined by 11.7% and single-family housing starts declined by 7.0%. Building permits declined by 3.7% and fell to the lowest level since June 2020 against expectations for an increase, with multi-family falling by 6.4% and single-family falling by 2.2%.

Diving a Little Deeper

Here are a few highlights from Redfin’s housing market reports:

• Number of buyers and sellers:
  • There were an estimated 506,000 more home sellers than buyers in August, meaning buyers held the negotiating power. But the tables could turn if falling mortgage rates bring more buyers off the sidelines.
  • The number of buyers in the market fell to an estimated 1.4 million last month—the lowest level in records dating back to 2013 aside from the start of the pandemic.
  • Sellers have retreated in response to buyer anxiety; the housing market has shed 50,000 sellers since May.
  • Florida and Texas are home to the strongest buyer’s markets. There are only five remaining seller’s markets, most of which are on the East Coast.

• August monthly market tracker
  • Active listings fell 1.4% in August—the biggest decline since 2023—as homebuying anxiety spilled over to sellers.
  • Mortgage rates dropped to the lowest level in about a year, which has led to an increase in refinancing activity but hasn’t yet translated into a jump in sales.
  • Redfin expects existing-home sales to end 2025 roughly in line with 2024, which was the slowest year since 1995—but the outlook could improve if rates fall further.
  • Home prices rose 1.7% year over year in August, the biggest uptick in five months.

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