Mortgage Rates (Freddie Mac):
- The average 30-year fixed rate decreased this week to 6.72% vs 6.74% last week
Fed Meeting Update
- On July 30, the Federal Reserve held interest rates steady at 4.25%–4.50%, marking the fifth consecutive hold this year
- Chair Jerome Powell emphasized inflation risks, particularly from tariff-related price increases
Inflation & PCE Update
- The Fed’s preferred inflation gauge, core PCE, rose 0.3% in June / 2.8% year-over-year
- This increase was driven in part by tariff-related price hikes, particularly in goods like furniture and apparel
- For the Fed to begin cutting interest rates, inflation must show more progress toward the 2% target
August Jobs Report
- Released today, the report came in well below expectations:
- Only 73,000 jobs were added in July (vs. 110-115k forecast), May and June were revised down by a combined 258,000 jobs
- Unemployment rose to 4.2%, up from 4.1%
- The disappointing data triggered a sharp stock market selloff today, compounded by the announcement of new broad-based tariffs
The Good News for Real Estate
- The weak labor report increases the likelihood of an interest rate cut, as the Fed’s dual mandate includes both price stability and maximum employment
- With the labor market softening, a rate cut may be necessary to stimulate hiring and growth
- As such, as of today when I checked, according to the CME FedWatch Tool:
- Markets are predicting an 88% chance of a 25 bps interest rate cut in September
- And a 64% chance of a second 25 bps cut in October
Why This Matters for Housing
- A Fed rate cut could bring mortgage rates lower, encouraging more buyers to re-enter the market. It may also prompt some sellers, who’ve held back due to “golden handcuff” low-rate mortgages to make a move
- In prime Los Angeles, especially in Santa Monica, inventory remains tight and well-priced homes, under $5M, continue to see multiple offers and go under contract quickly.
What This Means for You
If you’re waiting for rates to drop before making a move, this could be your moment to prepare.
Reach out and let’s discuss timing, pricing, and what’s happening in your neighborhood.
