Mortgage rates fell a bit last week thanks to continued good news on the inflation front. Trade wars don't seem to be having much affect on consumer pricing - and that's welcomed news. More importantly than the moderate drop in rates, a new report came out last week touting that buyers are in the driver seat when it comes to negotiating a home purchase in many parts of the country (including here in Austin).

The average rate on a 30-year fixed rate conventional loan fell to 6.842%  - from 6.922% the week before. 

But just because rates are high, it doesn't mean you need to settle for a bad deal. Last month, a realtor helped her buyer save $4,500 upfront—just by receiving our Friday Rate Alert text . Her client was already under contract, working a lender they’d used before who quoted them at a 6.375% with over $3,000 in points (ouch). After seeing our weekly alert, she introduced us to her client- who we were able to secure a 6.125% with a $1,500 credit. 

That’s $4,500 in day-one savings, PLUS $695 per year in interest saved by working with LendFriend!!! Make sure you're signed up for our weekly Friday rate texts. It could make a HUGE difference in your homebuying decision. 

Inflation Keeps Falling
 
The Personal Consumption Expenditures (PCE) index — the Fed’s go-to inflation gauge — showed just 2.1% year-over-year growth in April, beating expectations. That’s not only the slowest pace since early 2021, but it came despite new tariffs on imports imposed by the Trump Administration.
 
Two other interesting pieces of new came from the report - 1) Consumers put the breaks on spending and decided to start saving more (aka they're worried about the economy) and 2) Income increase by more than double expectations.

If the Fed wasn't so worried about the future effects of tariffs, we'd all be cheering this report as it's a big win in the war on inflation. Unfortunately, tariffs are still the headline, especially last week.

He said, Xi Said (China-US Trade Tensions Reignite)

Just when things seemed to be cooling off, the U.S.-China tariff truce is showing signs of unraveling — again.

President Trump accused China of violating their trade agreement, prompting speculation about further tariff hikes. Chinese officials fired back, calling the claims unfounded and politically motivated.

The flare that no one wants to see comes at a time when the legality of Trump's tariffs are facing scrutiny by the courts. Last Wednesday, the court froze most of his sweeping tariffs on virtually every foreign nation, which he announced on April 2nd. The very next day a federal appeals court in Washington, D.C., temporarily halted the federal trade court's decision, effectively allowing the tariffs to continue... for now. We'll see how things progress this week.

Long Live The Buyer's Market

National housing data confirms what we’ve been seeing in Austin for a long time: there are massive opportunities for buyers to get a great deal in many parts of the country.

As of April, the U.S. housing market had nearly 34% more sellers than buyers shopping for a home, according to an analysis by Redfin. This news comes at the same time that sales of existing homes are at their slowest pace for the month of April since 2009.
 

It's no different in many parts of Texas. Active listing in Austin are up 20% year-over-year, and active listings in Houston are up 30.3% year-over-year. Sellers are flocking to a market where there aren't enough buyers. . Even in Austin where homes sit on the market for 6+ months, we still see multiple offer situations on great homes, but that's the exception not the rule. 

Buyers should be negotiating in this market — on everything from purchase price to repairs and closing costs. Don't be too shy to ask for what you want.

How long will this buyer's market live? It depends on the big wildcard - rates.

A lot of buyers have hit pause while rates have stayed above 6.5%. If mortgage rates start sliding fast as they did in the second half of 2024 and don't tick back up, those buyers sitting on the sidelines won’t wait forever. 

Rate Cut Predictions

Fed Chair Jerome Powell met with President Trump in a private meeting at the White House last week — a high-profile visit that immediately raised eyebrows. While no official statement came out of it, timing is everything:

Just days earlier, the Fed minutes showed internal disagreements over whether inflation was still too hot, or if rising jobless claims were a bigger concern.

The Fed is at a crossroads. Some policymakers want to hold tight. Others see economic “cracks” forming and are more open to cuts. And while Powell stayed neutral publicly, the White House meeting has many wondering if behind-the-scenes conversations are signaling a shift in tone.

September 17th is still the target date, but there's a BIG week of labor reporting to get through this week. We'll see if the data (particularly on Tuesday and Friday) changes anyone's hearts and minds.