We've seen rates climb week after week since the Fed rate cut on 9/18, and last week was no different. Rates saw a big shift upwards, but there's hope for rates to start heading back down. 

As I said last week, this week (Oct. 28 - Nov 1) is going to be HUGE for mortgage rates as both PCE (the Fed's favorite inflation measure) and the US employment data reports. PLUS - with the 2024 presidential election just 8 days away, there's bound to be some rate volatility until we have a declared winner. 

The average rate on a 30-year fixed rate conventional loan went UP  to  6.68% (up almost 0.25% from 6.45% last week)!  Sign up for our weekly Friday rate texts to see all the great options LendFriend provides to homebuyers! 

Existing Home Sales Fall to 14 Year Low

But that's not stopping home prices from continuing to climb 3% year over year across the country.  Home sales fall 1.0% to 3.84 million units in September - as expected. Although rates were falling during this period, many potential buyers stayed sidelined because of a belief that rates would keep falling and, of course, housing affordability issues, according to the Fed's Beige Book.

 

However, as I continue to say, housing markets can vary tremendously from city to city. While home prices may be increasing nationally and in a number of cities across the country (for instance, South Florida homes are up 5% year over year). Other areas may be showing a decline like in the Greater Austin Area where there's been a 6.6% decline in home prices and active listings are up nearly 12% year over year to 5.9 months of inventory (aka a great buyer's market).  Then, there are some areas that are flat (or nearly flat) year-over-year like Houston.

New Home Sales highest in nearly 1.5 years

Unlike existing home sales, new construction saw a boost in sales - up 4.3% and higher than expectation. The difference, in my opinion, is due to the different motivations in sellers. Remember, builders HAVE to sell their new construction homes - that's the entire business model, so they are typically much more willing to make a deal, which means slashing sales prices and offering heavy seller concessions. 

Fed's Beige Book Gives Silver Lining

The Fed's Beige Book - the Summary of Commentary on Current Economic Conditions-  says maybe the economy isn't as red hot as people are currently assuming. Since the last report in early September, which was before the Fed's last meeting - manufacturing activity declined, consumer spending is mixed and labor increased slightly during this reporting period, with more than half of the Districts reporting slight or modest growth and the remaining Districts reporting little or no change. Also, inflation continued to moderate with selling prices reportedly increasing at a slight or modest pace in most Districts..
 
FED 2ND RATE CUT WATCH

With the next Fed meeting just 10 days away, odds on a rate cut in November have gone back to a near certainty. Right now, we see a 98.9% chance of a rate cut (up from 90.9%). But, remember - from what we've seen the last month- rate cuts DO NOT EQUAL lower mortgage rates. In fact, we've seen mortgage rates go up a full 1% since the Fed's September rate cut.

More important than rate cuts is the general state of the labor markets and inflation, which we'll get a very good picture of after this week's reports.