Hi everyone! I wanted to share a quick update on some important market events happening this week that could impact the real estate and mortgage landscape. Let’s break it down!

Mortgage Applications Have Dropped

Big Headline: Mortgage applications dropped by 17% in the week ending October 11, 2024.

What It Means: This dip shows how challenging the housing market is right now, with high mortgage rates and affordability concerns keeping many people on the sidelines. Both new home purchases and refinancing are slowing down. This reflects how people are feeling—caught between high rates and a lot of confusing news about the economy.

Retail Sales Data Coming Soon

What’s Coming: On Thursday, October 17, retail sales data for September will be released.

Why It Matters: This gives us a look into how consumers are spending, which can directly impact bond yields. If sales are strong, the Fed might hold off on cutting rates, and that means mortgage rates could stay high for a little longer.

Philly Fed Manufacturing Report

What’s Coming: Also on Thursday, we’ll get a snapshot of October’s manufacturing sector with the Philly Fed Manufacturing Index.

Why It Matters: A strong report means continued economic growth, which could make the Fed more hesitant about lowering rates. A weaker report might support more aggressive rate cuts, potentially lowering mortgage rates.

Weekly Jobless Claims Update

What’s Coming: Weekly jobless claims data will be released on Thursday.

Why It Matters: The health of the labor market plays a big role in the Fed’s decisions. If jobless claims go up, it could push the Fed to cut rates, easing mortgage rates down the line.

September Housing Starts and Building Permits

What’s Coming: On Friday, October 18, we’ll get a look at how many new homes started construction and how many permits were issued in September.

Why It Matters: A slowdown in new construction reflects the toll high mortgage rates are taking on builders, and signals continued challenges in the housing market.

Fed Speeches

What’s Happening: This week, 11 Fed members are scheduled to speak, including some key discussions on the economic outlook.

Why It Matters: These speeches can give us a glimpse into what the Fed is thinking about future rate cuts, which will influence bond yields and mortgage rates. Pay attention to Christopher Waller’s speech—it might offer important clues.

Fed’s Take on the Economy

In his latest remarks, Fed Governor Christopher Waller expressed confidence in the economy’s strength, citing healthy growth and a robust labor market. However, he’s also cautious about inflation, signaling that while rate cuts are likely over the next year, they’ll probably be slower than expected. This suggests that mortgage rates might stay higher for longer than we hoped.

Why Are Mortgage Rates Still Rising?

Even though the Fed cut rates by 0.50% in September, mortgage rates have climbed from 6.11% to 6.64%. How does that make sense? Well, it’s all tied to long-term Treasury bonds. As inflation expectations rise, so do bond yields, which pushes mortgage rates up. And if the market expects the Fed’s rate cuts to boost the economy (and inflation), long-term investors demand higher returns, making rates climb even more.

What to Watch For Next

We have a few key events coming up before the next Fed meeting in November. Keep an eye on these, as they will shape the economic picture:

• ADP Employment Report (November 1): If job growth is strong, the Fed may hesitate to cut rates.
• BLS Nonfarm Payrolls & Unemployment Rate (November 3): A weak report could signal economic cooling, supporting rate cuts.
• PCE Price Index (October 31): The Fed’s favorite inflation measure—if it’s still high, rate cuts might be delayed.

I’ll be keeping a close eye on these developments and will keep you updated on how they might affect our local market. If you’re considering buying or selling a home, feel free to reach out—I’m always happy to chat and provide insights.

As always, thank you for trusting me with your real estate needs. I’m here to guide you through these complex times!

- Olivia