September 27th: Real Estate Market Update
The Federal Reserve recently cut interest rates by half a percentage point, marking the first reduction since 2020. While this move was expected, mortgage rates didn’t immediately drop. However, with rates staying near their lowest in two years and home prices softening, housing activity is likely to pick up in the fall as borrowing becomes more affordable.
The Fed’s rate cut of 50 basis points was a unanimous decision, with more reductions expected this year. The focus is shifting to the labor market, and further rate cuts are projected over the next 15 months, including an additional 100 basis points by 2025. While rates briefly ticked up after the announcement, they’re expected to decline again by year-end if inflation continues to ease.
In housing, sales slowed in August as buyers hesitated, but pending sales are up, signaling stronger activity in September. California home prices saw modest growth in August, continuing a trend of smaller gains. Prices may soften further as the year ends but should still show year-over-year growth.
U.S. residential construction rebounded in August, with housing starts up by 9.6%. Single-family home construction saw a sharp increase, but it remains to be seen if this momentum will continue as existing homes become more available. (Source: California Association of Realtors)
