Week Of: August 25th, 2025

08-22-25 11:11am During a light week for economic data, investors were focused on an annual Jackson Hole speech by Fed Chair Powell which has often been used as an opportunity to signal upcoming policy changes. Powell did not disappoint, expressing modest support for looser monetary policy, so mortgage rates ended the week a little lower.

In his highly anticipated speech from the Jackson Hole economic summit on Friday, Fed Chair Powell suggested that the balance of risks on inflation and the labor market may justify cutting the federal funds rate. He continued to emphasize that "sweeping" changes in government policies have elevated the level of economic uncertainty, increasing the difficulty of decision making by Fed officials and calling for a patient approach. The primary challenge is that higher tariffs may cause the labor market to weaken, supporting lower rates. However, they also increase inflationary pressures, calling for higher rates. Most investors anticipate that the Fed will reduce the federal funds rate by 25 basis points at the next meeting on September 17.

In July, sales of existing homes rose 2% from June and were slightly higher than a year ago. The median existing-home price of $422,400 was up a very slim 0.2% from last year at this time, at a record for the month of July. Inventories remain stuck at low levels, standing at just a 4.6-month supply nationally, below the roughly 6-month supply typical in a balanced market. Still, inventories were 16% higher than a year ago.

The headline number for the latest home building data was encouraging, but the details of the report revealed mixed results. Overall housing starts in July increased 5% from June to the highest level in five months. However, the unexpected strength was primarily due to large gains in volatile multi-family units, while single-family starts rose a modest 3% from June. Single-family building permits, a leading indicator of future construction, dropped 3% from June to the lowest level since June 2020. A separate survey of home builder sentiment on housing market conditions from the NAHB unexpectedly declined to the lowest level since 2022. According to the NAHB, 37% of builders cut prices in August and 66% used sales incentives, the most since the pandemic.

Looking ahead, investors will continue to watch for additional information about tariffs and monitor comments from Fed officials for hints about monetary policy later in the year. For economic reports, New Home Sales will be released on Monday. Consumer Confidence will come out on Tuesday. Personal Income and the PCE price index, the inflation indicator favored by the Fed, will be released on Friday.

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