Weekly Economic Update 05-15-26: Existing Home Sales; Consumer Price Index; Producer Price Index; and Retail Sales

Inflation is surging so nominal retail sales are rising as consumers add on more and more debt.

The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

The economic news this week centered around inflation, with both CPI and PPI coming in incredibly hot as the conflict in the Middle East stagnates with no conclusion on the horizon. But let’s be honest…today is a day to celebrate, as it represents the end of the Powell era at the Federal Reserve Bank.

Be careful what you wish for.

Earlier this week, in the most partisan confirmation vote ever, the Senate confirmed Kevin Warsh to a 14-year term as the chairman of the Federal Reserve Bank. While I think it would be a great job (not that anyone is asking me) I don’t envy him. The man who appointed him has made no secret about the fact that he expects rates to be cut.

As I have predicted before, given the inflation data we got this week, there is no chance that rates will be cut in June, and frankly, I can’t see it happening for the rest of the year. In fact, it is likely that the Warsh Fed will have to raise rates modestly to stop the current wave of inflation. Fed funds futures now put the odds of a hike at the next meeting at roughly 39%.

Can you imagine the posts on Truth Social that will generate? Mr. Warsh is in for a rude awakening.

Existing Home Sales

The National Association of Realtors (NAR) gave us the April read on existing home sales (full release here), and the spring season is still failing to launch. Sales ran at a 4.02 million seasonally adjusted annual rate (SAAR) — virtually flat from March, and flat from one year ago. Expectations were for roughly 4.12 million, so the housing market continues to underperform. Existing-home sales have now been hovering near a 4-million annual pace since 2023, well below the historic norm closer to 5.2 million.

However, despite the slow sales, the median price keeps creeping higher. April’s median of $417,700 is up 0.9% y/y — a modest increase, but it is an all-time high for any April on record and the 34th consecutive month of y/y price gains. That price movement is very different than what we saw last week with new home sales, which are down 6.2% from one year ago. More homes are sitting longer (median 32 days on market versus 29 a year ago), sales are flat, and prices won’t drop. With the 30-year mortgage stuck near 6.4%, the affordability math isn’t fixing itself any time soon.