Mortgage rates in Texas and across the US have gone up, breaking the 8% mark this week. This is after months of gradually rising from around 7%. At the same time, the number of existing homes being sold has hit its lowest point in over a decade, which might not sound good for home buyers. But let's take a closer look at what's happening.
Unlike the last time we saw such low home sales, there's currently a shortage of available homes, not too many on the market. This situation has actually made the prices of homes more stable, and they're starting to go up compared to the previous year.
It's important to note that the drop in home sales we're seeing right now is for homes that are already built and owned by someone else. Many of these homeowners are still enjoying low mortgage rates of 2-3% from 2020-21. So, it's understandable that they don't want to sell and take on a higher 7-8% mortgage rate.
But there's a more positive story when it comes to new homes. They're selling much better than they were in 2010 and are now back to the levels we saw before the pandemic!
For those looking for good news, the Federal Reserve has suggested they won't raise rates again unless there's a sudden surge in inflation. This is reassuring after concerns rose when data earlier this week pushed up expectations for Fed rate hikes. By the end of the week, the market expected slightly lower rates for next year.
Some market analysts are even saying that the big jump in rates has already happened. Investors believe bond buying rates have stabilized, which can push rates down.
The future is uncertain, but there's room for optimism. The outcome will depend on economic data. The Fed believes the economy will stay strong as long as inflation is under control, and they won't rush to raise rates. Instead, they're more focused on how long rates will stay where they are.
We're currently in a quiet period before the next Fed rate announcement on November 1st. While the Fed isn't expected to raise rates, market watchers will be listening closely for any changes in their statement.
The week ahead isn't as crucial as the one after, especially the jobs report on November 3rd. If it shows a strong job market, it will support the pessimistic view. But if it paints a more moderate picture, it could mean good news for those hoping for lower rates. Let's see what happens next!