Housing Market Update | Week of September 16th

The real estate and mortgage market continues to be influenced by recent economic developments, with the Federal Reserve's monetary policy meeting this week being a key focal point. Last week’s release of the Consumer Price Index provided additional insights into inflationary pressures, further shaping expectations for rate adjustments. Last Week's Mortgage Rate Recap Rates Continued to Drop The CPI report for August revealed a modest increase in prices, suggesting that inflationary pressures are moderating. This development, combined with previous economic indicators pointing to a slowing labor market, has strengthened the case for a rate cut by the Federal Reserve. As a result, mortgage rates have generally trended downward in anticipation of the upcoming monetary policy announcement. This Week's Mortgage Rate Forecast Rates Should Stay Steady The Federal Reserve’s monetary policy meeting this week will be watched closely by investors and market participants. The Fed is widely expected to announce a rate cut in an effort to stimulate economic growth and mitigate the potential risks of a recession. If the Fed delivers a rate cut as anticipated, we can expect mortgage rates to continue their downward trajectory. However, any unexpected developments or shifts in the Fed’s outlook could lead to volatility in the market.

Last week’s influx of labor market data showed that the labor economy is continuing to soften. Economists fully expect to see a rate cut this month, though right now the markets are priced with the expectation of a 25bps cut rather than a 50bps cut. This week gives us some inflation data with the CPI on Wednesday; however, the main driver of mortgage rates will be how the bond market digests last week’s labor data. As you know, every different mortgage type has a different set of requirements, and it can be tricky to stay on top of it all! To help you give your clients the right information in a snap, my team created this Real Estate Agent study guide. This guide has down payment and credit score minimums, as well as the different maximum loan amounts for the top 5 types of purchase loans. Make sure to have this on hand the next time you meet with a client to help them understand their options! Last Week's Mortgage Rate Recap Rates Trickled Lower Three out of last week’s 4 pieces of labor data came in slightly softer than expected, which helped the 10-year yield drop below 3.8% and brought mortgage rates down slightly with it. The three employment reports that showed month-over-month job creation all came in lower than expectations. Most notably, the ADP report showed 99,000 jobs created—the lowest reading in this report since the pandemic. As a result of this employment data, bonds continued to drop, and spreads remained favorable for this drop to continue. This Week's Mortgage Rate Forecast Rates Should Stay Steady The only significant piece of data that we are expecting to see this week is Wednesday’s CPI report. Inflation data doesn’t quite hold as much weight as it used to, but it’s still something that Fed members watch, especially as we reach the end of the year. As things stand, we are getting a 25bps rate cut during the Fed Meeting next week. This rate cut is already reflected in mortgage pricing, so things should remain steady for the next couple of weeks. However, if the Fed pivots and cuts by 50bps, we could see a sharp decline late next week. As I shared earlier, my team created this Real Estate Study Guide to help give you quick access to down payment and credit score minimums, as well as maximum loan amounts for the top 5 types of purchase loans. Feel free to print it out to have on hand with your upcoming client meetings!

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.