The Federal Reserve increased its short-term interest rate from 1.75 percent to 2 percent Wednesday, the second rate hike to take place this year. In a press release, the central bank said the rise is due to a robust labor market and solid economic activity.
“Job gains have been strong, on average, in recent months, and the unemployment rate has declined,” read the release. “Recent data suggest that growth of household spending has picked up, while business fixed investment has continued to grow strongly.”
“On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent,” the release added.
A report by Yahoo also noted that The Fed omitted “the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run” from June’s announcement — a phrase that has been a mainstay for years. This, economists speculated, is a signal that the bank adjusting its “monetary policy as nearing its neutral rate setting.”
In an emailed statement, realtor.com chief economist Danielle Hale said hesitant homebuyers should be happy with the Fed’s decision and would be smart to go ahead make a purchase.
“Homebuyers who have been able to take advantage of the uncertainty to lock lower rates are likely to be satisfied with their decision,” Hale said. “In spite of ongoing record-low inventories in the housing market, we know that 557,000 new listings hit the market in May, the highest number since summer 2015.”
“These new listings may be just the opportunities homebuyers need to find and close on a home,” she added.