Three weeks, three increases. Freddie Mac's 30-year fixed mortgage averaged 6.76% this week, up from 6.71%, while the 15-year fixed moved to 6.09%. The weekly path since late August has been 6.65%, 6.66%, 6.71% and now 6.76%, and with the Federal Reserve meeting Tuesday and Wednesday, this is the most consequential week for mortgage rates we have had all year. Here is what Central Utah buyers and sellers need to know.
Inflation Ran Hot
Friday's Consumer Price Index showed prices rose 0.4% in August after just 0.1% in July. The annual rate stayed at 3.4%, and core inflation actually eased to 2.4%, but the monthly jump was driven by gasoline, which rose 3.9% in a single month and is up 27.4% over the year. Shelter costs rose 0.3%, and that is the line the Fed watches most closely because rent and owner-equivalent rent do not reverse quickly. Energy is up 16.3% year over year.
Oil is the reason. Brent crude jumped to about $99 a barrel last Monday after reports of Iranian attacks on U.S. Navy ships, and the shutdown of Saudi Arabia's East-West pipeline on Friday pushed prices right to the $100 line. The 10-year Treasury yield closed near 4.95% Thursday, its highest level since the conflict began. Mortgage rates follow that yield, which is why we have seen three straight weekly increases.
The Fed's Next Move
After Chair Warsh's Jackson Hole warning, a strong jobs report and now a hot CPI print, a quarter-point rate hike on Wednesday would surprise no one. The federal funds rate has been at 3.50% to 3.75% since last year. Whatever the committee decides, the accompanying projections will tell us how many more moves are coming. Our advice: if you are under contract or close to it, talk to your lender about locking before Wednesday afternoon.
Inventory Watch
Thursday's NAR report showed August existing-home sales slipped 2.0% to a 3.98 million annual pace, the first reading below 4 million since spring. The median price was $429,100, up 1.6% from a year ago, the smallest gain in months. The bigger story is supply: 1.62 million homes were listed nationally, the first time inventory has topped 1.6 million since November 2019, and months of supply rose to 4.9. More choice for buyers, more competition for sellers.
What This Means for Central Utah
Two local reports landed this week. University of Utah researchers at the Kem C. Gardner Policy Institute reported Wednesday that Utah's statewide median home price reached $520,000 in the first quarter, requiring an income near $150,000 to buy, and that 91% of Utah renters cannot afford the payment on a median-priced home. The report also projects the state will need 280,000 more housing units by 2035. Those numbers are driven by the Wasatch Front, and they are exactly why Central Utah real estate keeps attracting families who want a house and a yard without a $3,600 monthly payment.
Here in Sevier County, Redfin's August data shows a median sale price around $305,000, down about 7% from a year ago, with homes selling in a median of 42 days and roughly 28% of sales closing above list price. Fewer homes sold than last August, but the ones that were priced right moved quickly. That is a very different market from the Wasatch Front, and it is a manageable one for a buyer using a USDA zero-down loan in Richfield, Monroe, Salina or Manti.
For sellers, national inventory is growing and rates are rising, so this is not the time to test the ceiling. Price to the last three months of closed sales in your town, make sure your home shows well in fall light, and be open to a buyer asking for closing-cost help or a rate buydown. Homes that do those things are still selling in about six weeks here. Our team is happy to run the numbers on your specific property before the Fed announces on Wednesday.