FOMC Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s commentary following the Federal Reserve’s FOMC statement released this afternoon on monetary policy and the economy:

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“The FOMC increased short-term rates yet again at its July meeting, responding to high, but moderating inflation and a job market that remains quite strong. However, both are now moving in a direction which could allow this hike to be the Fed’s last for this cycle. We expect that to be the case, but for the Fed to hold off on any rate cuts until we are well into 2024.

“While the market for new home sales has recovered considerably over the past few months, the pace of overall housing market activity remains quite slow. Although the lack of inventory remains a constraint, housing affordability challenges continue to delay many potential buyers from entering the market. We do expect mortgage rates to trend down once the FOMC clearly signals that they have reached the peak for this cycle, as the reduction in uncertainty with respect to the direction of rates should narrow the spread of mortgage rates relative to Treasury benchmarks.”