I hope you’re all having a great week! It’s been a little quieter on the economic data front, but what we did get this week, along with some great insights into the housing market, gives us a lot to talk about.
What’s Happening with Rates?
The big story this week is that mortgage rates continue to hover near their best levels of the year. While the 30-year fixed rate did tick up slightly, by .04 percent, it’s still well below the 52-week average of 6.71 percent. This small increase is due to some minor overseas market movements, not any major economic news. What’s important to remember is that we’ve been seeing lower rates over the last few months, and that’s making homebuyers feel more confident about getting into the market. Freddie Mac’s Chief Economist, Sam Khater, even noted an increase in pending home sales.
While the government shutdown has put a temporary pause on some key economic reports, like the official Jobs Report, the ADP National Employment Report gave us a sneak peek into the labor market. The report showed that the private sector shed 32,000 jobs in September, a rare contraction. This data signals a cooling labor market, which is something the Fed has been watching closely. In fact, the market is now anticipating two more rate cuts from the Fed by the end of the year, which would bring the federal funds rate down to a range of 3.50 percent to 3.75 percent. This won’t directly impact mortgage rates, but it will help lower rates on things like credit cards and home equity lines of credit, which can be a big help to family budgets.
The Housing Market is Normalizing
For those of you looking to buy or sell, there’s some interesting news on home prices. The Case-Shiller Home Price Index, a key tracker of U.S. home values, showed that prices took another small step down in July. This is the fifth consecutive month of decline, but don’t worry—this isn’t a crash. Instead, it’s a sign of a market that’s finally settling down after years of rapid growth. While prices are still up from last year, the pace of that growth is slowing. When you factor in inflation, home prices are actually feeling a bit cheaper.
This trend is especially important for our first-time buyers and those looking for more affordable options. A new report shows that starter homes are leading the market right now! The median price for a U.S. starter home hit a record high of $260,508 in August, but sales for these homes are actually increasing year-over-year, while sales for more expensive homes are seeing a slight decline. This is because starter homes are the most attainable option for many people in a market with low inventory and higher rates. It seems that both first-time buyers and downsizers are competing for the same pool of smaller, less expensive homes, keeping demand strong.
My Two Cents
The overall message this week is one of stabilization. We’re seeing a more balanced market, where the frenzied pace of the last few years is giving way to a more predictable and sustainable environment. Lower rates and cooling home prices are creating new opportunities, especially for those who have been patiently waiting on the sidelines.
As always, if you have any questions or want to discuss what this means for your personal financial goals, please don’t hesitate to reach out. You can simply send me an email or call/text me at 818.307.602. I’m here to help you navigate this market and find the right solution for you.
