On September 18th, the Federal Reserve Bank dropped its benchmark rate for the first time since 2020 – a very positive development for housing markets – and many analysts expect one or more additional cuts before the end of the year. In their latest readings, inflation fell to its lowest point in 3½ years and consumer confidence improved for the 4th month running. Stock markets have been volatile since mid-July but remain close to all-time highs.
As of early October, mortgage rates were the lowest since February 2023, but then an unexpectedly strong jobs report caused them to spike back up, perhaps just a short-term fluctuation amid the major downward trend of recent months. It has been very challenging in recent years to predict changes in interest rates, as there are many unpredictable national & international economic and political factors at play, but the consensus opinion is that rates will (probably) continue to decline in Q4.
The recent drop in interest rates has not so far precipitated the substantial rebound in buyer demand that many had expected. It may be that expectations of further declines are keeping some buyers on the sidelines as they wait (and hope) for that to occur. In the meantime, the increase in the number of homes for sale continues to outpace sales activity, tilting the supply and demand dynamic and underlying market conditions toward buyers’ advantage. However, many homes are still selling quickly for over asking price: It all depends on the specific property, its price, location, condition and circumstances. Market-heat indicators (and median sales prices) usually peak in spring (Q2), then cool significantly in Q3, and that was broadly the case this year.
October is the heart of the autumn selling season before activity typically begins to plunge heading into the mid-winter holidays. It is also a period that can see a high number of price reductions as sellers attempt to get unsold homes into escrow before that big slowdown occurs.
