MetroIntelligence Economic Update by P. DUFFY
New home sales rise for third consecutive month but still down 19.0 percent year-on-year
Sales of new single‐family houses in Feb. 2023 rose for the third consecutive month to a seasonally adjusted annual rate of 640,000, up 1.1 percent above the revised January rate but down 19.0 percent from February 2022. The median sales price of new houses sold in Feb. 2023 was $438,200, up 2.5 percent year-on-year. The average sales price was $498,700, down 4.5 percent year-on-year. The seasonally‐adjusted estimate of new houses for sale at the end of February was 436,000. This represents a supply of 8.2 months at the current sales rate vs. 8.3 months in January and 6.0 months in Feb. 2022.
Fed raises interest rates another 25 basis points to combat stubborn inflation
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 raise the target range for the federal funds rate to 4-3/4 to 5 percent (up another 25 basis points). It expects these rate hikes to end 2023 at 5.1 percent before gradually falling in 2024.
Fed updates economic projections in March meeting
The Fed has updated its March 2023 projections vs. December 2022 and assumes the following for year-end 2023: GDP growth of 0.4% vs. 0.5%, unemployment rate of 4.5% vs. 4.6%, PCE inflation of 3.3% vs. 3.1%, Core PCE inflation of 3.6% vs. 3.5% and Fed Funds rate of 5.1% vs. 5.1%, dropping to 4.3% in 2024 and 3.1% in 2025.