Buyers Flocking to Low Interest Rates

The National Association of Realtors (NAR) reports that existing home sales rose 1.3% in August from July to an annual rate of 5.49 million units, above the 5.36 million expected. Overall, sales were up 2.6% from a year ago. The NAR said that buyers are finding it hard to resist the current low mortgage rates. The median home price rose 4.7% from a year ago to $278,200. Inventories of homes for sale on the market fell to a 4.1-month supply, below the normal level of 6 months.

Mortgage rates jumped in the latest survey from Freddie Mac and was the largest gain since October of 2018 though they remain historically low. The 30-year fixed-rate mortgage rose to 3.73% this week from 3.56% last week with 0.5 in points and fees. Last year this time, the rate was 4.65%. Freddie Mac said that it is clear that the housing market is finally improving due to the strong labor market and low mortgage rates.

The Federal Reserve cut the short-term fed funds rate yesterday, as expected, to bring the rate to 2.0%. Not all Fed members were on board with the .25% rate cut. A few preferred not to cut rates while another wanted a bigger .50% cut. Along with the fed rate cut, there were three important takeaways from Fed Chair Powell's press conference and the monetary policy statement such as, there is no recession in sight, the consumer is also alive and well, and exports have slowed.