Hi Friends! 

As July kicks off, geopolitical tensions are dominating the headlines, but the markets seem to be taking a different view. Despite weekend news that the U.S. launched airstrikes on Iranian nuclear sites—and Iran’s subsequent move to vote on closing the Strait of Hormuz—market indicators haven’t followed the alarm bells. Oil prices are down, stock futures are up, and investors appear to be pricing in a short-lived escalation rather than a prolonged conflict.

This isn’t to say the risks aren’t real. Roughly 20% of global oil flows through the Strait of Hormuz, and if fully blocked, the global energy market could experience significant disruption. While China is heavily reliant on this region for oil, the U.S. is less so due to domestic production. Nonetheless, constraints on global supply typically push prices up. But that’s not happening—yet.

Markets appear to be focusing on the longer-term picture. Investors are likely betting on a diplomatic resolution or limited military engagement. For now, the message from Wall Street seems to be: stay calm, and stay focused.

What to Watch This Week: Key Market Indicators and Housing Data

Geopolitical Developments
Oil initially spiked 5% but quickly reversed course, with prices falling by 0.2% and natural gas down 1.1% just hours into the new trading week. The market's muted reaction suggests limited fear of broader escalation.

May Existing Home Sales – Reported Tuesday
Existing home sales rose 0.8% in May to a 4.03 million annualized rate—slightly beating expectations. Still, sales remain down 0.7% year-over-year and below historical spring levels. Inventory, however, is improving, with a 6.2% monthly increase and a 20.3% year-over-year jump to 1.54 million homes on the market. The median home price reached $422,800, up 2.1% from April.

Upcoming Data Releases – Tuesday Through Friday

• Case-Shiller and FHFA Home Price Index (Tuesday): Offers a snapshot of national home values.

• Consumer Confidence Index (Tuesday): Key indicator of buyer sentiment.

• Fed Chair Jerome Powell’s speech (Tuesday): Watch for policy signals, especially with growing political pressure to cut rates.

• New Home Sales & Mortgage Applications (Wednesday): Insight into current housing demand.

• GDP (Q1 Final), Durable Goods, Jobless Claims, and Pending Home Sales (Thursday): A full slate of economic health indicators.

• PCE Inflation Report (May) (Friday): The Fed’s preferred inflation metric. A soft reading could nudge policymakers closer to rate cuts.

Is a Rate Cut Coming in July?

Fed Governor Miki Bowman has suggested she may support a July rate cut, stating that if inflation remains contained, she’d back lowering the policy rate to sustain labor market health. This is a notable shift, as Bowman was previously focused on inflation risks. She cited a weakening labor market, slow economic growth, and a narrow base of job creation as reasons for a more dovish stance.

Still, it’s important to remember that a Fed rate cut doesn’t automatically translate into lower mortgage rates. Historically, cuts have sometimes led to higher mortgage rates if bond markets lose confidence in inflation control.

Redfin’s Take on the May Market

Redfin reported a record-high median home price for May at $440,997. However, year-over-year price growth slowed to just 0.7%—the smallest annual gain since June 2023. Other key trends:

• Homes took 38 days on average to sell—the slowest May since 2020.

• Active listings hit a five-year high.

• Existing-home sales fell to a 4.21 million annual rate.

• 14.6% of pending sales fell through, the highest May cancellation rate on record.

• Just 31.2% of homes sold above asking—the lowest share since 2019.

This paints a picture of a cooling market with rising buyer leverage. Buyers now have more options and time to negotiate, and in several key markets, prices are softening.

Price Declines by Metro (YoY):

• Oakland, CA: -6.6%

• Austin, TX: -4.1%

• San Francisco, CA: -4.0%

• Jacksonville, FL: -4.0%

• Dallas, TX: -3.9%

Top Price Growth Markets (YoY):

• Buffalo, NY: +16.7%

• Rochester, NY: +11.2%

• Philadelphia, PA: +8.6%

• Providence, RI: +8.1%

• New Brunswick, NJ: +6.5%

The Fed Under Fire: Political and Public Pressure

Housing affordability remains a crisis point. There are now 500,000 more sellers than buyers in the U.S., the widest gap since the 2008 housing collapse. With rates above 7%, many homeowners are holding onto their low-rate mortgages, and prospective buyers are stuck on the sidelines.

Bill Pulte, Director of the FHFA, has publicly called for Fed Chair Jerome Powell’s resignation, arguing that current monetary policy is choking the housing market and working against the FHFA’s mission. Pulte believes inflation is under control—headline CPI is at 2.1%, and core inflation is at 2.8%—and that rate cuts are overdue.

The Fed is now caught between a fragile labor market, climbing political pressure, and a housing sector desperate for relief.

A Radical Proposal: Abolishing the Federal Reserve

Representative Thomas Massie (R-KY) is once again pushing to abolish the Federal Reserve, introducing H.R. 1846 in 2025, which seeks to eliminate the central bank’s authority altogether. His argument:

• The Fed devalues the dollar by creating money and fueling inflation.

• It encourages risky borrowing and market bubbles with artificially low rates.

• It enables excessive government debt.

• It undermines financial independence by controlling interest rates and the money supply.

Supporters believe ending the Fed would return power to free markets. Opponents warn it would cause financial instability, bank failures, and volatile price swings. Though Massie’s proposal has little chance of passing, it underscores the rising frustration many Americans feel with the current economic landscape.

Final Thoughts

The tension between high rates and housing affordability is reaching a breaking point. While rising inventory and softening prices suggest opportunities for buyers, the path forward will depend heavily on Fed policy—and market confidence in that policy. A July rate cut is looking more likely, but the impact on mortgage rates and housing affordability remains uncertain.

If you’ve been waiting for the right moment to re-enter the market, now is the time to stay informed, stay prepared, and be ready to move when the timing feels right.