In this Real Estate News Brief for the week ending August 27th, 2022... the Fed Chief’s Jackson Hole message on rate hikes, the July dip in inflation, and why some home buyers say they have regrets. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. https://podcasts.apple.com/us/podcast/real-estate-news-real-estate-investing-podcast/id1079952715Economic NewsWe begin with economic news from this past week. Federal Reserve Chief Jerome Powell shook things up with some hawkish remarks in a speech at Jackson Hole. His comments triggered a major stock market sell-off with the Dow dropping more than 1,000 points.Powell’s speech focused on the central bank’s responsibility and resolve to get inflation back down to the 2% level. He said that could include another three-quarter point rate hike at the Fed’s September meeting, but Powell said the size of the rate hike will depend on all the totality of the data between now and then. (1)He also warned that households and businesses will feel some pain because of higher interest rates, slower growth, and softer labor market conditions, but doubled down on the need to continue with tight monetary policy for an extended length of time. Some economists believe that means “no” rate cuts in 2023, even if inflation has settled back down. The Federal Funds rate is currently between 2.25% and 2.5% which Powell calls “neutral.” The Fed committee is expecting that rate hikes will bring it close to the 4% level, and it will remain there through the end of next year. But he says the Committee may offer a new prediction at the upcoming September meeting.Powell’s speech came just after the latest report on the PCE or personal consumption expenditures index. That’s the central bank’s preferred gauge for inflation. The report shows inflation was down .1% in July, mostly due to lower gas prices. That brings the annual PCE down from 6.8% to 6.3%. (2) Powell responded to the report saying: “A single month’s improvement falls far short of what the Committee will need to see before we are confident that inflation is moving down.”Meantime, the government issued an update on the second quarter GDP. It had initially said the economy contracted .9% but the revision shows it shrank .6%. The main reason for the upward revision is that consumer spending and business investment was stronger than previously reported. Business profits were also positive, after a decline in the first quarter. As MarketWatch reports, they were up 6.1% in Q2. That’s good news because when companies are profitable, there’s little incentive for layoffs. (3)The weekly jobless report also shows that layoffs remain near record lows. New jobless claims were down to a one-month low of 243,000. They’ve been as low as 166,000 in March, which is the second-lowest level ever. The summer high point was 261,000, but they’ve been edging lower since then.Moving on to home sales and the housing market slowdown. New home sales were down in July to their lowest level since January 2016. They fell 12.6% from an annual rate of 585,000 in June to 511,000 in July. Year-over-year, sales are down 29.6%. (4) Although that sounds bad, the housing market has been way too hot for quite some time. The slowdown will help slow home price growth, and bring the market back toward normal. Existing home sales are also down. The National Association of Realtors reports that they fell 1% in July compared to June. But that’s less than the 3% drop that analysts polled by the Wall Street Journal had expected. Year-over-year, existing home sales are down 19.9%. NAR’s chief economist Lawrence Yun says: “In terms of the current housing cycle, we may be at or close to the bottom in contract signings.” He says the smaller than expected drop is likely reflecting the stabilization of mortgage rates. (5)Mortgage RatesMortgage rates had been bouncing around a bit near the 5% mark, but this last week, they shot