Weekly Mac's MD Market Minute (M4): Mortgage Rates and Economic Shifts

The past week brought significant shifts for homebuyers, largely driven by stronger-than-expected job growth and rising mortgage rates. The U.S. added 254,000 jobs in September, far surpassing expectations, which pushed the unemployment rate down to 4.1%. This positive jobs report has fueled hopes for a “soft landing” for the economy but also caused bond prices to drop and mortgage rates to climb.

As a result, the average rate on a 30-year fixed-rate mortgage rose to 6.62%, nearly 50 basis points higher than where it stood before the Fed’s recent rate cut. Adding to the mix, September’s Consumer Price Index (CPI) showed higher-than-expected inflation, although shelter costs—the largest part of the CPI—saw some easing.

Despite rising mortgage rates, there are signs of optimism in the market. Fannie Mae’s Home Purchase Sentiment Index rose to its highest level since early 2022, signaling that consumers remain cautiously hopeful about the future, even if 81% still feel it’s a “bad time to buy.”

Looking ahead, the market anticipates further rate cuts, with an 86% probability of a 25 basis point cut at the November 7 Federal Open Market Committee (FOMC) meeting.

As economic factors continue to fluctuate, it’s essential to stay informed about how these changes may impact your buying or selling decisions.

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