Happy Labor Day from all of us on the Donavan and Tyson Team. The holiday week brought a bit less relief on the rate front: Freddie Mac's 30-year fixed averaged 6.71% on Thursday, up from 6.66%, and the 15-year fixed rose to 6.04%. Chief economist Sam Khater said purchase demand has stayed relatively stable, which matches what we are seeing in Central Utah, where buyers have largely adjusted to rates in the high 6% range.
A Jobs Surprise
Friday's employment report was the week's big mover. Employers added 162,000 jobs in August, roughly triple the 53,000 economists expected and the strongest month since March. June and July were revised up by a combined 55,000. Unemployment held at 4.1%, and average hourly earnings rose 0.3% to $37.75. Leisure and hospitality led the gains while information and financial services shed jobs.
Strong hiring is good news for household budgets, but bond markets read it as one more reason the Federal Reserve can afford to tighten. The 10-year Treasury yield, which mortgage rates track most closely, climbed to about 4.77% by Thursday, its highest level in weeks. Every tick higher in that yield shows up in mortgage quotes a few days later.
The Fed's Next Move
The Federal Open Market Committee meets September 15-16, and after Chair Warsh's Jackson Hole warning that rates may need to rise, this jobs report removed one of the last arguments for holding steady. July's meeting already had three dissents in favor of a hike. We are not in the prediction business, but we would not be surprised by a quarter-point increase next week. Keep in mind that mortgage rates usually move before the Fed acts, not after, so a good chunk of any hike is probably already priced into today's 6.71%.
Oil Keeps the Pressure On
Energy stayed front and center. Brent crude topped $92 a barrel Tuesday after the first exchange of strikes between the United States and Iran in more than a month, then pushed toward $95 by Thursday. U.S. diesel prices hit an all-time high above $5.85 a gallon last week, which matters for everyone in our farming and trucking communities from Delta to Loa. As long as the Strait of Hormuz stays mostly closed, energy will keep inflation elevated and mortgage rates from falling far.
What This Means for Central Utah
Labor Day marks the unofficial turn from summer to fall in the Sevier County housing market. Historically, September brings serious buyers who want to close before the holidays and before winter weather makes moving harder. With mortgage rates ticking higher, the buyers still out there are motivated and pre-approved, which is good news for sellers who price realistically.
For buyers, a rate near 6.71% is not the 6.4% we saw earlier this year, but it is far from the 7%-plus levels of 2023 and 2024. If you are shopping in Richfield, Salina, Manti, Nephi or any of our smaller towns, USDA zero-down loans remain one of the best tools available, and the Deseret News noted last month that Utah homes are among the largest in the nation per listing, which means you often get more house per dollar here than almost anywhere along the Wasatch Front. Consider asking for a seller-paid rate buydown as part of your offer; with inventory more balanced than it has been in years, many sellers are open to it.
Sellers, the strong jobs report is a reminder that the economy is not in trouble, and buyers still have income to spend. Keep your pricing tied to the last 90 days of sales, not to spring wish lists, and let our team help you present your home at its best as the fall market gets underway.