US DATA: New Home Sales Pick Up, But Outlook Remains Subdued
Jan-27 19:40
December's pickup in new home sales was larger than expected, reaching 698k (675k expected) on an seasonally-adjusted annualized rate basis, up from 674k in November (revised up from 664k).
That marked a 3-month high (and a 6.7% Y/Y gain), with inventories down to 8.5 months worth of sales (from 8.7 prior and a recent peak of 9.4). Median prices for single-family homes rose 2.1% Y/y ($427k, not seasonaly adjusted).
As with the previous week's stronger-than-expected existing home sales report, this suggested a slight tightening in the housing market at end-year, albeit at subdued levels (especially for existing).
Some of the improvement may have resulted from the pullback in mortgage rates in the summer, which started reversing in September/October.
New home sales have been relatively less afftected than those of existing homes, in part because of homebuilder-provided incentives to offset high mortgage costs for buyers.
With inventories remaining relatively high by historic standards and mortgage rates rebounding, it's unclear how much further homebuilding activity has to pick up in coming quarters: the NAHB's sentiment index, a leading indicator of building permits acitivity, has stabilized since plummeting in mid-2023 but remains below historic averages.
FED: Jan 2025 FOMC Analyst Views: QT Seen Ending Mid-Year (2/2)
Jan-27 19:21
All analysts expect the FOMC to hold rates steady at the January meeting.
Statement: Changes are seen being limited largely to the first paragraph describing current economic conditions. Most focus is on the labor market language, which – for those analysts who expect statement tweaks – could shift slightly to reflect some stabilization in conditions in recent months, vs previous easing.
Forward guidance is expected to be unchanged.
QT: The Fed is seen ending quantitative tightening (more specifically, for Treasuries, with MBS continuing to run off), at some point between March and September 2025 – consensus is for a mid-year (ie June) end.
FED: Jan 2024 FOMC Analyst Views: Wide Range Of Cutting Calls (1/2)
Jan-27 19:19
Analysts enter the first FOMC meeting of 2025 expecting anywhere from zero rate cuts to 125bp worth of reductions by year-end, with March the first plausibly “live” meeting.
The central expectation is for 50bp of reductions in 2025, with analysts either looking for front-loaded (March, June) or back-loaded (September, December) reductions.
Some see more easing in 2026 than in 2025 (Barclays, Deutsche Nomura).