Mortgage rates barely moved this week, with Freddie Mac's 30-year fixed averaging 6.66%, a single basis point above last week's 6.65%. The 15-year fixed came in at 5.98%. Freddie Mac's Sam Khater noted that more homes coming to market and slower price growth are giving buyers better options and a more balanced market. That description fits what we are seeing across Central Utah real estate as summer winds down.
The Fed's Next Move
The week's headline event was Friday's Jackson Hole speech from Federal Reserve Chair Kevin Warsh. He said inflation remains too high, that the summer's better readings do not convince him underlying trends have improved, and that the Fed may have work to do, which markets took as a signal that a rate hike is on the table at the September 15-16 meeting. He also said he would be hard-pressed to call current financial conditions restrictive. For mortgage borrowers, the takeaway is simple: do not count on the Fed to push rates lower this fall.
The data backed him up. Wednesday's PCE report, the Fed's preferred inflation gauge, showed prices up 3.7% from a year ago, with core PCE at 3.3%. Consumer spending rose 0.2% in July but was flat after inflation, and the saving rate ticked up to 3%. The second estimate of second-quarter GDP held at 1.5% annualized growth, with consumer spending revised up to a 3.4% pace. Consumer confidence slipped to 89.4 in August, a seven-month low, with households expecting 5.8% inflation over the coming year.
Housing by the Numbers
Tuesday brought two housing reports. New-home sales fell 10.5% in July to a 607,000 annual rate, pushing new-construction supply to 9.6 months, with a median new-home price of $393,800. Builders are sitting on inventory, and that is where rate buydowns and incentives are most generous right now. Meanwhile, the S&P Cotality Case-Shiller index showed national home prices up 1.5% year over year in June, with the 20-city composite up 2.1%. With inflation running above 3%, that means home values have actually fallen in real terms for 13 straight months.
What's Moving Markets
Oil remains the wildcard. Brent crude traded in an $86 to $91 range for most of the week after the U.S.-Iran truce lapsed without a permanent deal, then jumped Monday after the first exchange of strikes between the two sides in more than a month. Only about 107 vessels transited the Strait of Hormuz last week, compared with roughly 130 per day before the war. Energy is the main reason inflation is stuck near 3.4%, and until that changes, the 10-year Treasury, which closed near 4.67% Thursday, is unlikely to drop much.
What This Means for Central Utah
If you are buying in Sevier, Sanpete, Juab, Wayne or Piute counties, this week's data argues for acting on a good house rather than waiting on the Fed. Rates in the mid-6% range are the reality for now, and Warsh made clear the next move could be up. Ask us about USDA Rural Development loans, which still allow zero down in nearly all of our small towns, and about seller-paid buydowns, which are very negotiable when new-construction supply sits at 9.6 months.
Sellers should note the Case-Shiller message: prices are rising slowly nationally, and buyers know it. A home in Richfield or Ephraim priced at last year's peak will sit, while one priced to current comps will draw offers, especially from Wasatch Front families who can trade a $600,000 mortgage for something far more manageable here. September is traditionally one of our stronger listing months as families settle in after Labor Day, so if you are thinking of selling, now is the time to get your home ready. Our team would love to help you plan it out.