Mortgage Rates Sideways After Fed Reset

Mortgage rates initially rose following the Federal Reserve’s October meeting, where Chairman Jerome Powell announced a cut to the Fed Funds Rate but emphasized that another cut in December was not guaranteed. Since then, rates have traded within a relatively narrow range.

With the federal government reopened and key agencies resuming data releases, mortgage rates could be more sensitive to incoming economic information as markets reassess their outlook on the labor market and inflation. The delayed September Bureau of Labor Statistics (BLS) employment report, scheduled for November 20, will offer a view of the labor market before the shutdown. Though dated, it will be the final jobs report available before the December Federal Open Market Committee (FOMC) meeting, as the October report has been cancelled and the November report delayed.

Impact on the Housing Market

The modest rate relief seen in September and October encouraged both buyers and sellers to re-engage, leading to stronger than expected housing activity for the season. However, affordability remains a significant constraint for homebuyers. Although home values have declined in roughly half of major metro areas over the past year, prices remain well above pre-pandemic levels.

Still, for financially prepared buyers, this time of year can be a sweet spot. There’s often less competition than in the spring and more time to make sure the home’s a perfect fit. Sellers who stay in the market into the holidays may be more open to negotiating.