A hawkish Federal Reserve and a slightly lower mortgage rate in the same week? That is what happened. Freddie Mac's 30-year fixed averaged 6.47% for the week ending June 18, down from 6.52%, and the 15-year fixed eased to 5.81%. The reason those two things can coexist is that long-term Treasury yields, which drive mortgage pricing, barely moved after the Fed meeting, while short-term yields did the reacting. For anyone planning home buying in Central Utah this summer, the takeaway is that rates are stable in the high 6.4s, not climbing.
The Fed's Next Move
On Wednesday the Federal Open Market Committee unanimously held the federal funds rate at 3.50% to 3.75%. It was Chair Kevin Warsh's first meeting, and the tone changed. The statement dropped the language that had leaned toward future cuts, and the new projections show a median year-end rate of 3.8%, up from 3.4% in March. Nine of eighteen participants now expect at least one hike this year, eight expect no change, and one sees a cut. The committee described the economy as expanding at a solid pace with inflation elevated, partly because of energy price shocks tied to the Middle East.
Markets took it seriously. The two-year Treasury yield jumped more than 16 basis points, the biggest Fed-day move since 2008, while the 10-year yield actually dipped to about 4.45%. That split is what kept mortgage rates from rising: investors believe a tougher Fed today means lower inflation later. Chair Warsh also announced task forces to review how the Fed operates, so expect more headlines from Washington this summer.
Housing Data: Demand Up, Construction Down
Pending home sales rose 3.8% in May and were up 4.8% from a year ago, with gains in every region. NAR's chief economist called it a late-spring buyer rush and said consumers are accepting above-6% mortgage rates as the new normal. We agree; the buyers we are working with have stopped waiting for 5% and are focused on finding the right house at the right price.
Supply is the weak spot. May housing starts plunged 15.4% to a 1.18 million annual pace, driven by a 40.2% drop in multifamily construction. Single-family starts slipped 1.9% to 882,000, down 6.7% from last year, as builders wrestle with higher rates, material costs, and labor shortages. Fewer new homes nationally means the resale market carries more of the load, which supports pricing for well-kept existing homes.
What's Moving Markets
The United States and Iran formally signed their memorandum of understanding on Wednesday, opening a 60-day window to negotiate a final deal. Oil fell and stocks rallied on Thursday as tanker traffic began moving through the Strait of Hormuz again. Fighting in Lebanon and slow shipping kept a floor under crude late in the week, but the direction is encouraging for inflation and for mortgage rates.
What This Means for Central Utah
Summer officially arrived this weekend, and our market in Sevier County and the surrounding valleys is behaving the way a balanced market should. Buyers have choices, sellers who price correctly are getting offers, and nobody is panicking about the Fed. If you are buying, a 6.47% rate is roughly where we have been for six weeks, so there is no need to rush a decision but also little reason to expect a big drop before fall. Check your USDA eligibility if you are looking in Salina, Monroe, Loa, Delta, or the Sanpete towns; zero-down financing is a real advantage when rates sit in the sixes.
If you are selling Sevier County homes this summer, the national pending sales bump tells you demand is there. The national construction slowdown tells you competition from new builds is limited. Your job is to price at the market, prepare the home, and let the buyers who are already looking find it. Our team is here to help with both the numbers and the plan.