It’s been a busy and interesting time in the market, with a lot of movement on multiple fronts that could affect your home-buying or selling plans. I’ve been keeping a close eye on the latest economic reports and mortgage rate trends, and I’ve got some key updates to share that I think you’ll find helpful.
A Look at Mortgage Rates and the Fed
This past week, we saw some positive news on the rate front. The 30-year fixed-rate mortgage (FRM) averaged down .02 percent, a slight drop from last week and the lowest it’s been since early October. This marks the fourth consecutive week that rates have remained in a narrow, stable range, offering some predictability in an otherwise dynamic market.
Why the drop? Much of it is tied to the bond market’s reaction to recent economic data, particularly a significant jobs report that triggered strong bond buying—a move that typically pushes rates down. Mortgage lenders have been catching up with this market shift, and as a result, we’re seeing some of the most favorable rates in months.
Speaking of market movement, the Federal Reserve held its key interest rate steady at its July 31st meeting. While there was no immediate cut, the Fed hinted that a potential rate cut could be on the table as soon as September if inflation continues to cool. The Fed is watching jobs and inflation data closely, so any surprises in the coming weeks could influence their decision. For now, the message is one of stability, but it’s always wise to be prepared for potential shifts.
The Housing Market: Not Headed for a Bust
If you’ve been worried that the current market might be leading to a housing crash like the one in 2008, a recent analysis from First American Data & Analytics offers some reassuring insights. The report suggests that the current slowdown in price growth is a sign of a market that’s softening, not collapsing.
There are three key factors that differentiate today’s market from the pre-2008 environment:
1. Stronger Loan Quality: Today’s borrowers have higher credit scores and face more conservative underwriting standards. The risky loan products that were common before 2008 are largely gone.
2. Healthy Equity Buffers: The average loan-to-value ratio is a healthy 28%, giving homeowners a significant buffer of equity. This makes it much easier to avoid foreclosure, even if they run into financial trouble.
3. Persistent Supply Shortage: A decade of underbuilding means there’s still a significant shortage of homes on the market, especially in the Northeast and Midwest. This tight inventory puts a floor on how low prices can fall.
While the national market’s fundamentals are solid, it’s worth noting that price trends vary widely by region. For example, some states and cities are still seeing modest price growth, while others are experiencing declines. This means it’s more important than ever to look at local market trends when making a decision.
The Bigger Economic Picture
Beyond the housing market, there have been a few other positive economic signals:
• Gross Domestic Product (GDP): The second quarter GDP reading came in at 3.0%, a significant rebound from the previous quarter. This indicates a growing economy, which is a good sign for everyone.
• Consumer Confidence: The Consumer Confidence index improved nicely in July. Why does this matter? Consumer spending makes up nearly 70% of our economy, so when people feel good about the future, they’re more likely to spend, which helps fuel economic growth.
What’s Next?
In the coming week, we’ll be watching for a few key reports, including the ISM Manufacturing Index and weekly Initial Jobless Claims. These reports will give us a better sense of where the economy is headed and could influence future rate movements.
Whether you’re thinking about buying your first home, selling and moving up, or just curious about the market, I’m here to help you navigate these changes. If you have any questions about how this news might impact your personal situation, please don’t hesitate to reach out by simply sending me an email or text/call me at 818.307.6072.
