We expect that inflation will continue to ease as demand responds to tighter financial conditions, but remain high enough to pressure the Fed to continue moving short term rates rapidly to neutral. Because inflation does not respond immediately to tighter monetary conditions, it has continued to surge, hitting 8.6% in March before easing somewhat to 8.2% in April. At its recent May meeting, the Fed made good on those expectations, raising the short-term rate by 50 basis points, the biggest hike in 22 years, and setting the groundwork for more large adjustments. The Fed followed through in March, and in addition to lifting the Fed funds rate, their economic projections signaled that more and/or larger rate hikes would be needed than expected in December. In the span of roughly two months, futures markets had re-priced a March hike from a longshot to near certainty. In its January 2022 meeting, the Fed signaled their plan to begin rate hikes at the March 2022 meeting, and markets responded. In the December 2021 Fed meeting, decision makers accelerated the planned end date of the Fed’s asset purchase program and raised expectations for short term rates by the end of 2022 to just shy of 1%, which would imply roughly three quarter point rate hikes in 2022.
#Dropkey price crack#
As we finalized our results in late 2021, the consensus on inflation being a largely transitory phenomenon that could be tamed with a garden-variety tightening cycle was just starting to crack as inflation accelerated from just over 5% in August to more than 7% by December.
#Dropkey price driver#
The change in financial conditions is the most dramatic driver of change in our revised outlook. ® 2022 Forecast for Key Housing Indicators Housing IndicatorĮxisting Home Median Sales Price AppreciationĪverage 5% throughout the year, 5.5% by end of yearĪverage 3.3% throughout the year, 3.6% by end of yearĪ Changing Economic Landscape Inflation is High and Monetary Policy Pivots The growth is driven by a combination of more sellers and a slowing home sales pace.
While we now forecast a notable step down from 2021, home sales on par with these projections would mean that 2022 sales are the 2nd highest tally since 2007, trailing only 2021.
#Dropkey price update#
® National Housing Forecast Update 2022: A Moderating Housing Market Means More Options for Home Shoppers
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