Fed & Real Estate Interest Rates Update
Big news ahead, September 17 is decision day for the Federal Reserve. That’s when we’ll find out if they’re holding interest rates steady or finally cutting them.
Why the buzz?
The odds are leaning toward a cut. And the reason isn’t just inflation — it’s jobs.
At Jackson Hole about a month ago, Fed Chair Jerome Powell made it clear the Fed is shifting its focus. Instead of putting all the weight on inflation, they’re paying closer attention to the labor market. Job growth has slowed, unemployment is ticking up, and that’s getting the Fed’s attention.
Now, yes, inflation is still running above their 2% goal. But here’s the twist: the Fed sees the recent bumps in CPI (Consumer Price Index) and PCE (Personal Consumption Expenditures) as mainly driven by tariffs. In other words, they think it’s temporary. Once the dust settles on trade policies, they expect pricing pressures to ease.
Important point: that doesn’t mean prices will fall, it just means the rate of increase could slow. Once prices go up, they usually stay up (unless we’re talking about things like eggs or gas, which bounce around).
What’s expected
- Most experts see a quarter-point cut this week.
- Some are even predicting more cuts later if inflation continues to cool and the job market weakens further.
- But remember: mortgage rates don’t always move in lockstep with the Fed. They’re also tied to bond yields and investor confidence.
Real estate impact
- The 30-year fixed mortgage has already eased to about 6.35%, the lowest we’ve seen in almost a year.
- Refinance activity is picking up, and buyers are stepping back into the market.
- Still, affordability remains a hurdle, home prices are high and inventory is tight, so even with lower rates, buyers are feeling the pinch.
What to watch
- The Fed’s announcement and outlook on Sept 17.
- Upcoming inflation and jobs reports.
- Long-term Treasury yields, which have a big influence on where mortgage rates actually go.
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Takeaway
The Fed is signaling more support for jobs, while hoping inflation pressures fade with tariffs. For real estate, we’re starting to see some relief in mortgage rates, but affordability and inventory are still the real challenges.