Housing Market Update

Jeff Sica from Sircle Squared Alternative Investments recently highlighted that even small interest rate cuts by the Federal Reserve won’t solve the housing affordability crisis. He emphasized that gold continues to be a strong hedge against both inflation and global uncertainties.

According to Freddie Mac’s primary mortgage market report released on Thursday, average rates for 30-year fixed mortgages have increased slightly to 6.34%, up from 6.3% last week. For context, last year, the average rate was at 6.12%.

In a notable shift, almost one in four homes in the U.S. has reduced its price, as buyers seem to be gaining the upper hand in the changing market.

Sam Carter, the chief economist at Freddie Mac, observed, “This week, we’ve seen 30-year fixed-rate mortgages rise again, but they are still below the 52-week average of 6.71%. Recent months have offered lower rates, and buyers have been eager to participate in the market, evident in the uptick in pending home sales.”

The average rate for a 15-year fixed mortgage also ticked up, now at 5.55%, compared to 5.49% the previous week. Just a year prior, it had an average of 5.25%.

As purchasing power takes a hit, only about 28% of U.S. homes are currently deemed affordable for average households. However, the dip in mortgage rates has encouraged more buyers to re-enter the market. This week, data from the National Association of Realtors indicated a 4% rise in home sales for August, based on signed contracts, which was above analysts’ expectations of a 0.2% increase.

Jiayi Xu, a senior economist from Realtor.com, shared insights regarding the current market conditions, suggesting that potential government shutdowns are impacting mortgage rates, which have been closely tracking Treasury yields. “The timing of this could be critical, especially following the Federal Reserve’s first policy rate cut in nine months,” she mentioned. “The longer the shutdown lasts, the more it may affect both the market and key monetary policy decisions.”

In summary, while lower mortgage rates have drawn buyers back into the market, ongoing uncertainties could hinder sales in areas with a high number of federal workers.