In this Real Estate News Brief for the week ending August 19th, 2023... what economists say the Fed will do next, a new record high for U.S. home values, and the cities with the biggest need for new housing.   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.   Economic News   We begin with the results of a poll among economists on whether the Fed is through with rate hikes. Reuters polled 110 economists for their opinion on what the Fed will do next. 90% of them believe the Fed will keep interest rates right where they are. About 80% don’t think we’ll see another rate hike for the rest of the year. And, a slight majority are anticipating a rate cut by March. (1)   Those predictions run contrary to the minutes from the central bank’s last policy meeting. The minutes show that Fed officials are still seeing upside risks that could require further rate hikes. And Fed Chief Jerome Powell said rate hike decisions will be driven by incoming data. (2) The Federal Funds rate is currently running in a range of 5.25% to 5.50%. That’s after a quarter point hike last month. Those rate hikes appear to have succeeded in brining down inflation which is now down to 3% from 9%. The Fed wants to see inflation come down to the 2% level. 83% of the polled economists don’t expect to see that until the middle of next year. The Fed will not stop raising rates, and certainly won't cut rates until the job market slows down, and that does not appear to be happening yet. The latest weekly jobless report shows that initial claims fell 11,000 to a total of 239,000. That’s down from a seven-week high of 250,000 for the previous week. The number of continuing claims was up 32,000 to a total of 1.72 million. As reported by MarketWatch: “Most laid-off workers appear to be finding new jobs” right away. (3)   High rates are usually a result of a strong economy. The Fed cuts rates when the economy weakens, and clearly, that has not happened yet, even after 11 rate hikes since last year.    Home builders are pumping more new homes into the pipeline as demand increases. Housing starts were up 3.9% for July to an annual pace of 1.45 million. That’s up from 1.4 million in June. Single-family construction is leading the way, while multi-family construction is flat. Building permits were also up, but only by .1%. (4)   Builders are feeling less confident about the market. The National Association of Home Builders says their confidence level dropped in August for the first time in eight months. Their biggest concern is a fixed-rate mortgage that is now over 7%. (5)     Mortgage Rates   Freddie Mac says the average 30-year fixed rate mortgage was up 13 basis points this last week to 7.09%. The 15-year was up 12 points to 6.46% (6) Freddie says that mortgage rates are now at the highest averages since 2002.  What's causing rates to go up? Mortgage rates are mostly tied to treasury bonds, and the 10 year treasury rose last week in part because the Fed is reducing its balance sheet by selling off its treasuries. With too many treasuries for sale, the yield has to rise to attract investors. Additionally, core inflation didn't drop as much as expected, and rents and home prices continue to climb, in spite of higher rates.   Home Values Are Soaring in Some Cities   U.S. home values are soaring to an all-time high. Redfin says that home values were up .4% in June to a record high $46.8 trillion. That’s after a peak last year of $46.6 trillion. Value are rising the most in more affordable markets that are attracting remote workers, while they are decreasing in more expensive markets. (7)   Austin, Texas, and Oakland, California, have suffered the biggest declines in value at 9.6% and 8.7% respectively. Cities like San Francisco and Seattle have also seen a big drop in values.   Values in Little Rock, Arkansas, went up the most, at 8.8%. Values in Camden, New Jersey, and Milwaukee were also up s