Fed Chair Jerome Powell: Recent data 'indicate that it is likely to take longer than expected' to win the war against inflation

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On Tuesday, Fed Chair Jerome Powell suggested that the central bank’s inflation fight could take longer than previously expected.

“More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal,” Powell said on Tuesday while speaking at the Washington Forum. “The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence.”

Powell pointed out that progress made on the disinflation front—meaning a decelerated rate of consumer price growth—in the second half of 2023 hasn’t carried over into early 2024.

Powell then added that: “We can maintain the current level of restriction for as long as needed.”

The "higher for longer" sentiment has been shared by analysts on Wall Street, who, in recent months, have reduced their forecast for 2024 rate cuts. This has also coincided with a bounce back up in mortgage rates.

On Tuesday, the average 30-year fixed mortgage rate as tracked by Mortgage News Daily hit 7.50%. That’s the highest mortgage rate reading in 2024, and the highest level since November 13, 2023.

Click here to view an interactive version of the chart below

The recent rise in mortgage rates also means that housing affordability remains strained.

When taking into account mortgage rates, house prices, and income levels, housing affordability today is around the worst levels since the mid-80s.

On Tuesday, we got the March 2024 reading for seasonally adjusted housing starts (annual rate):

Total housing starts: 1,321,000 (-4.3% year-over-year)

Single-family starts: 1,022,000 (+21% year-over-year)

Multifamily starts (5 units or more): 290,000 (-43.7% year-over-year)

Click here to view an interactive version of the chart below

To gain a deeper understanding of how the commission lawsuits and the proposed settlement by NAR could impact the housing sector, ResiClub has been seeking submitted commentary. Please note that this commentary may not necessarily reflect the views of ResiClub.

Today we’re featuring commentary from Stephen 'Capz' Capezza, the president of Side, a real estate brokerage platform. Capezza was formerly a senior vice president at Zillow Group, overseeing the Zillow Premier Agent program.

Capezza: “There’s a lot that’s still unclear about how the NAR settlement will actually shake out. But one thing is certain: We are about to see the number of unproductive agents dropping out of the industry accelerate. And I believe that’s a great thing. Our industry is filled with subpar “hobbyists” who barely transact; just last year, 49% of licensed agents sold zero or one house. While those hobbyists are typically uninvested and facilitate poor experiences for consumers, the industry at large has done very little to push them to do better. In fact, quite the opposite has happened: Brokerages and associations have built their economics such that they make more money the more agents are on their rosters, not by actively engaging in improving the transaction experience for agents or consumers. The NAR settlement will shake up that status quo. Buy-side representation, in particular, is going to require a higher service standard, and agents are going to have to be much better at explaining the value they will bring to the table in order to get an exclusive agreement signed. Excellent agents will take this evolution in stride, as they always do. These are the agents who have always remained top agents, no matter the market cycle. But the hobbyists will buckle under the added pressure. Ultimately, we are moving toward and industry filled with fewer — but better — agents who provide incredible service to their clients and communities. That’s a good thing for everyone.”