Housing Market Update | Week of December 16th

We have an eventful week ahead of us, highlighted by the December Federal Reserve Meeting on December 17th and 18th. The Fed is expected to cut the federal funds rate by 0.25%. It will also release its Dots Plot Chart, which shows the Fed’s projections for the Fed Funds Rate, inflation, GDP, and unemployment in 2025. Finally, we will get the Personal Consumption Expenditures (PCE) inflation report on Friday. All in all, we could be in for a volatile week. All things considered, 2025 is set to be a great year for the housing market. Mortgage rates are projected to drop, inventory looks likely to increase, and homebuying demand is primed to grow throughout 2025. Check out my 2025 housing market forecast to learn why these trends are expected so you can stay ahead of the game and prepare your buyers for next year’s anticipated market movements. Last Week's Mortgage Rate Recap Rates Rose Slightly After seeing mortgage rates and the 10-year drop for three consecutive weeks, we saw a bit of a rebound on Friday likely in anticipation of the upcoming Fed Meeting. Fortunately, the rise wasn’t as sharp as many anticipated thanks to improved mortgage spreads. One positive trend we’ve noticed this month has been purchase application growth. Over the last 6 weeks, we’ve seen 5 positive prints. This is a good indicator of market resilience and increased activity to come in 2025. This Week's Mortgage Rate Forecast Rates Will Be Volatile Like we said earlier, we’ve got a busy week ahead with plenty of data and newsworthy events that will set the tone for the final weeks of the year and the first weeks of 2025. On Wednesday, we will hear from Fed Chairman Jerome Powell following the December Fed Meeting. A 0.25% cut appears to be nailed on. Perhaps the most important piece of information from that meeting, though, will be the Fed’s updated 2025 Dots Plot Chart. The previous Dots Plot Chart, released on September 18, showed 1% of cuts throughout 2025. The Fed can change its tone quickly, but this week’s data will likely set the tone for the early part of the new year. Finally, we have our PCE inflation report, which is the Fed’s favorite measure of inflation, on Friday. The markets are expecting headline and core inflation to both rise, which could make bonds and mortgage rates both rise. We're just a few weeks away from a new year! Check out this blog and feel free to share these 2025 market prediction graphics with your buyers as we approach the end of the year.

Last week was a wild one for mortgage rates. Although the Federal Reserve announced that they would not be cutting the Federal Funds rate in their May meeting, they did announce that they are tapering their balance sheet reduction. This, combined with weak labor data sprinkled at the end of the week, saw mortgage rates drop at the end of the week. Last Week's Rate Recap: Rates Dropped Slightly Last week, the Federal Reserve held its May meeting. While they decided against cutting rates, Jerome Powell, Fed Chairman, held a dovish stance on the possibility of rate cuts in the future. Last week’s labor reports also showed a softening in the jobs market which caused rates to drop quickly at the end of the week. While it’s still unlikely that we see a rate cut in the Fed’s next meeting, a weakened labor market will be the key to seeing rates drop as the year goes on. This Week's Rate Forecast: Rates Should Stay Steady After the flurry of data and insight from last week’s jobs reports and the Federal Reserve meeting, we have a quieter week ahead without much data for the market to digest. Following a steep drop to the 10-year yield at the end of the week, market analysts will have a careful approach to instill some stability throughout the week. Overall, we should expect to see some steadiness throughout the week. If you want a more comprehensive overview of the market’s reaction to the Federal Reserve meeting and labor data last week, check out a replay of today’s Special-Edition Monday Market Update. Our two hosts offered plenty of insight behind these rate movements and some tactical advice to help you use these pieces of market data to better serve our homebuyers.