Fed minutes, April home sales take center stage
Housing takes the spotlight in this week’s economic news, with reports coming out on new and existing home sales. Also on tap: the latest business investment figures and minutes of the Federal Reserve’s early May meeting.
There’s plenty of demand for newly built homes, driven by Americans’ solid job and income growth and a shortage of existing houses. But construction firms are struggling to find workers and lots, making for volatile sales month to month. And in April, cold weather likely curbed purchases, Nomura economist Lewis Alexander says, following a 4% increase the prior month. Economists expect the Commerce Department on Wednesday to report that new home sales fell 2% last month to a seasonally adjusted annual rate of 680,000.
The Federal Reserve’s May 1-2 meeting was fairly humdrum as the central bank didn’t raise its key shortterm interest rate after bumping it up a quarter percentage point in March. But as usual, the Fed’s post-meeting statement featured some subtle signals that could be clarified by a summary of the gathering.
With inflation rising close to its 2% annual goal, the Fed dropped its previous assertion that it’s “monitoring inflation closely.”
In other words, the Fed may not need to accelerate its rate hikes simply because inflation edges above 2%.
Existing home sales have been choppy because of limited housing supplies. After sales rose in February and March, economists are looking for a modest pullback. The National Association of Realtors on Thursday is expected to report existing home sales dipped 0.5% in April to an annual rate of 5.6 million.
On Friday, Commerce releases its April report on orders for long-lasting goods such as computers, aircraft and factory equipment.