Housing Market Update | Week of January 5th

Mortgage rates have been relatively flat since the Fed cut the federal funds rate in early January, but that could change this week. The first full week of the year brings us a full plate of market-moving data, with a new batch of labor reports coming on Wednesday and Friday. Earlier this morning, two voting Fed Presidents acknowledged that the labor market is weak, but not weak enough to justify another cut. This week’s data will offer us a fresh perspective; we get the ADP private employment report and the Bureau of Labor Statistics' (BLS) Job Openings, Layoffs, and Turnover Survey (JOLTS) on Wednesday and the headline BLS jobs report on Friday. If anything can get rates to break below the tight range they’ve bounced between, it’s Friday’s jobs report, so that will be one to watch. Last Week's Mortgage Rate Recap Rates Were Flat Last week was a light week for new data, and mortgage rates remained flat as a result. It’s been much of the same since the Fed cut the federal funds rate at its December meeting; the 10-year Treasury yield has bounced between 4.12% and 4.19%. For us to see some meaningful movements, we’ll need to see the 10-year break beneath that floor. This Week's Mortgage Rate Forecast Rates Could Move The first full week of 2026 will bring us a fresh batch of labor market data. Mortgage rates barely budged when the BLS released its October and November labor data in mid-December. The fact that this report was delayed and largely incomplete was a significant factor in this stagnation. With the government shutdown no longer impacting the data collection process for these reports, Friday’s BLS report (and the ADP + JOLTS reports on Wednesday, to a lesser degree) could spark some movement again. As always, for mortgage rates to drop, the labor data needs to show more signs of weakness. Projections for Friday’s report expect 55,000 nonfarm payroll jobs created in December and for the unemployment rate to sink from 4.6% to 4.5%. If the nonfarm payroll figure comes in below 55,000 and/or the unemployment rate rises, we could see a slight drop in mortgage rates. Otherwise, expect rates to remain in this range. For real-time housing market insight or answers to any mortgage-related questions you have, click here to connect with a UMortgage Loan Originator near you!

The longest government shutdown in U.S. history officially ended on November 12, bringing long-awaited clarity to financial markets that have been flying blind since the shutdown began on October 1. For more than six weeks, key government agencies didn't release critical economic data, such as jobs reports and inflation readings, leaving the Federal Reserve and investors without their usual guideposts. As this data finally returns, we can expect market activity to pick back up and mortgage rates to start moving again. When Will Economic Data Be Released? The government shutdown delayed the release of several weekly & monthly economic reports essential to the Federal Reserve’s monetary policy, including the PCE and CPI inflation reports and the monthly BLS jobs report, which are typically the most impactful. When the shutdown ends, what happens to those reports? Let’s break it down. Consumer Price Index (CPI) inflation report: The September CPI report, originally scheduled for October 15, was released on October 24 as a requirement for Social Security cost-of-living adjustments. It showed core CPI increased by 0.3%. The October report was originally due on November 13th, but because that data hasn’t been collected yet, it will likely be delayed until December. The November report is due December 10th, and we could see the October print included. Bureau of Labor Statistics (BLS) Jobs Report: The September BLS jobs report was initially scheduled to be released on October 3rd. The data for this report were collected before the shutdown began, so it’s likely to be released between November 17 and 21. As for the October jobs report, the BLS will need to survey companies and individual households. We likely won’t get this report until December. The November BLS report is currently scheduled for release on December 5. The BLS surveys businesses and households for its monthly reports starting the week containing the 12th day of the month. Given that the government will reopen on November 17th, the November jobs report may be delayed by a week. Personal Consumption Expenditure (PCE) inflation report: It’s important to note that PCE is the Federal Reserve’s preferred inflation report. September’s PCE report was initially scheduled to be released on October 31st. It’s likely to be delayed until late this month. The October PCE report, initially due November 26th, will likely be delayed until mid-to-late December. How will rates move when this data is released? So far this year, the average mortgage rate has dropped by a full percentage point. What’s driven this drop has been a steadily deteriorating jobs market as seen from the BLS data since May this year. The Fed specifically cited the labor market as the reason for the rate cuts we saw in September and October. Inflation also remains a concern and will need to either drop or stay under relative control in the PCE and CPI reports. When these reports are released, we’ll likely see some market volatility. If the BLS labor data is weak and/or inflation doesn’t rise quickly, rates should go down. If the labor market shows signs of improvement or inflation starts to rise out of control, rates might rise. How to navigate the rate market for the rest of 2025 The best way to protect yourself against a volatile housing market is to work with experienced mortgage professionals whom you can trust. UMortgage has Loan Originators licensed nationwide and ready to help you time the market & maximize the wealth-building benefits of homeownership. Ready to get started? Fill out this form to get connected with a Loan Originator near you.

If you’ve been watching the news lately, you’ve probably seen a lot of headlines about the Federal Reserve and interest rates. And if you're a homebuyer or a real estate agent working with buyers, you might wonder: Does the Federal Reserve control mortgage rates? It’s a great question. And the short answer is: Not necessarily. The longer answer is a bit more nuanced because while the Fed does play an important role in the economy, it doesn't directly control mortgage rates. What Is the Federal Reserve and the Federal Funds Rate? The Federal Reserve, often referred to simply as the Fed, is the central bank of the United States. Its primary job is to keep the economy healthy by keeping inflation in check, supporting the labor economy, and promoting stable & sustainable economic growth. One of the main tools the Fed uses to manage the economy is the Federal Funds Rate. This is the interest rate banks charge one another for overnight loans. While consumers don’t pay this rate directly, it has a ripple effect across the economy, influencing rates on credit cards, auto loans, and savings accounts. How the Federal Funds Rate Influences the Economy When the Fed raises the Federal Funds Rate, it becomes more expensive for banks to borrow money. That tends to result in higher borrowing costs for consumers and businesses in an attempt to slow down inflation and prevent the economy from overheating. When the Fed lowers the rate, borrowing becomes cheaper. This encourages more spending and investment, often a strategy used during economic slowdowns or recessions. Important distinction: The Federal Funds Rate influences the economy, but it does not directly control mortgage rates. Why Mortgage Rates Don’t Always Follow the Fed Here’s where a lot of confusion begins. Many people assume that when the Fed raises interest rates, mortgage rates automatically rise too. But that’s not how it works. Mortgage rates are driven by a different set of economic factors, mainly the bond market. Specifically, rates are closely tied to the 10-year Treasury yield and the performance of mortgage-backed securities (MBS). Investors who buy these securities care most about the labor market, inflation, the long-term economic outlook, and market stability/instability If inflation is rising or expected to rise, mortgage rates tend to increase. If economic conditions appear weak or uncertain, rates can fall, even if the Fed is raising the Federal Funds Rate. In fact, mortgage rates often move in anticipation of what the Fed might do, not just in response to what it has done. The markets are always looking ahead. What Really Drives Mortgage Rates? Here’s a quick snapshot of the major factors that impact mortgage rates: Inflation: Higher inflation usually = higher mortgage rates. Economic Growth: A strong economy can lead to higher rates. Global Events: Uncertainty (like geopolitical conflict or pandemics) can drive rates lower. Bond Market Demand: More demand for mortgage bonds often = lower mortgage rates. In other words, mortgage rates are influenced by a wide range of factors and are always forward-looking. Want more in-depth analysis of the housing market? Check out our weekly Housing Market Update blog. How Homebuyers and Real Estate Can Navigate the Market For homebuyers and the real estate agents supporting them, the key takeaway is this: Don’t assume that a Fed rate cut means mortgage rates are going down. In some cases, mortgage rates don’t move much on the day that the Fed cuts rates. Most of the time, they will drop in the lead-up to a Fed Meeting if a rate cut is expected. Other times, they might drop after a Fed announcement, depending on how markets interpret the economic outlook. If you’re considering buying a home or are an agent for a hesitant buyer, here’s how you should navigate periods of market instability: Focus on personal goals and timing, rather than trying to time the market. Work with a knowledgeable mortgage professional who can explain how market shifts impact your unique situation. Make informed decisions based on the bigger picture, not just headlines. Whether you're buying, selling, or considering a refinance, UMortgage Loan Originators are here to help you navigate the market with confidence and leverage homeownership to build wealth. If you’re curious about your homebuying or refinance options and want expert guidance, fill out this form to get connected with a UMortgage Loan Originator in your area!