The real estate industry is cautiously optimistic about a year-end boost as financial targets pave the way for interest rates to (eventually) fall.
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Each week on Download, Inman’s Christy Murdock goes deeper into the week’s hottest stories to give you the information you need to face Monday. This week: The property sector is cautiously optimistic about a year-end boost as financial targets pave the way for interest rates to (eventually) fall.
It’s rare for the sometimes dry economic forecasters to get what’s called “giddy,” but this week’s economic news seems to have done just that. Inflation data are starting to reflect already falling rental rates, creating an environment that could (eventually) lead to lower interest rates and a corresponding boost to the housing market.
“It finally happened,” wrote Jay ParsonsOne real estate economist has been saying for more than a year that falling rents point to a sharp decline in national inflation.
Extra: ‘It’s finally happening’: Cooling inflation opens door to interest rates
Federal Reserve Chairman testifies to lawmakers Jerome Powell The Fed chairman expressed cautious optimism about the economy’s “significant progress” toward achieving the Fed’s 2% inflation target. “Reflecting these developments, risks to achieving our employment and inflation goals are better balanced,” Powell said.
Interest rates are trending downward again after surging after the June 27 presidential debate, as investors in the bond market, which funds most mortgages, grow increasingly confident the Federal Reserve will cut interest rates in September.
After hovering around 7%, 30-year fixed-rate mortgage rates began to fall back to an average of 6.96% on July 3, according to rate lock data tracked by Optimal Blue. Subsequently, the interest rate on a 30-year fixed-rate conforming loan dropped another 20 basis points to 6.76% as of Thursday, July 11.
On July 5, the CME Group’s FedWatch tool showed a 78% chance of a rate cut in September, up from 74% on Wednesday and 64% on June 28. The probability is 94%, and investors expect the probability that the Federal Reserve will cut interest rates by more than 50 basis points this year to be 52%.
Extra: FHA, VA require drive-up pickup in mortgage purchases
If lower rates bring buyers and sellers on the fence into the market, you’ll want to stay informed about post-settlement rules and best practices. Fortunately, you can tap Inman expert contributors to get the practical implementation and trading advice you need now.
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