Housing, Jobless Data to Drive Markets This Week

Investors will scrutinize this week’s economic data for more clues on what the Fed might do at its September monetary policy meeting.

On tap are data on home sales and initial jobless claims, both scheduled for release on Thursday. 

Economists expect that the government will report that initial jobless claims ticked up from 227,000 to 234,000 during the week ending Aug. 17, higher than the one-year average of 219,000, but down from July’s 250,000 high.

Investors have been using the weekly initial jobless claims numbers as a timelier indicator of the health of the labor market than the once-a-month nonfarm payrolls report that showed unexpected softness in July, raising recessionary concerns. 

A figure that deviates notably from the consensus might be a catalyst for financial markets that are still jittery following a short, but sharp sell-off earlier this month. 

A rate cut of either 25 or 50 basis points is widely expected. The Fed has left the rate unchanged since last July, a decision that has rankled some investors in recent weeks. 

Home Sales Expected at Near 14-Year Lows

Also on Thursday, the National Association of Realtors will release its latest figures for existing home sales. 

Expectations are that sales edged up from 3.89 million units annualized to 3.92 million in July, leaving them close to 14-year lows.

Investors will be keen to see whether the recent decline in 30-year mortgage rates to just under 7% has been enough to boost the number of housing transactions.

A combination of high mortgage rates and record high home prices has pushed the cost of housing to levels that are out of reach for many Americans.

With new home construction constrained—housing starts hit their lowest level since 2020 last week— lower mortgage rates are likely to be the only factor that can help thaw the housing market in the short term.