Fall Real Estate Season Begins
It is unofficially the end of summer this week. Of course, we understand that the official last day of summer this year is September 21. But in reality, the summer ends with Labor Day because the kids are going back to school and vacation season ends. In addition, within many areas of the country, after Labor Day starts the fall real estate season. The fall real estate season is not usually as robust as the spring real estate market, but activity does pick up after the vacation season ends.
This year it did not seem like we had a real estate slowdown during the summer. With interest rates near record lows, the only thing which seemed to be holding sales back was a shortage of listings in many areas of the country. When assessing the potential for a strong fall showing, we must ask — will rates continue near record lows? The direction of interest rates depends upon several factors, one of which we will see this Friday when the jobs report is released.
We had strong jobs reports the last two months, however, rates did not react much because of the Brexit situation and also because we had a very weak employment report released in early June. Basically, the two strong reports evened out the numbers over the past three months. A third strong report could be seen as the evidence the Federal Reserve is looking for in order to justify raising rates later in September — especially if there is any hint of increased wage inflation. On the other hand, a weaker report with tame inflation would most likely keep any action by the Fed on hold until later in the year, or perhaps even next year.
The Weekly Market Update
Rates were stable again in the past week. For the week ending August 25, Freddie Mac announced that 30-year fixed rates were at 3.43%, the same as the week before. The average for 15-year loans were unchanged at 2.74% and the average for five-year adjustables rose slightly to 2.75%. A year ago, 30-year fixed rates were at 3.84%, almost one-half of one percent higher than today's levels.
Attributed to Sean Becketti, Chief Economist, Freddie Mac -- "Treasury yields were little changed from the prior week and 30-year fixed-rates held steady at 3.43 percent this week. This marks the ninth consecutive week that rates on home loans have been below 3.5 percent. Markets erred on the side of caution ahead of the second estimate for second-quarter GDP and Fed Chair Janet Yellen's speech, both of which occurred one day after the release of the survey on Friday."
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.