Market Update - October 11, 2024

Friday, October 11, 2024

This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.

Rates are provided by Housing Wire in conjunction with Polly. Rates are updated in real-time. Polly data is calculated using actual locked rates. **Rates are inclusive of locks that occur below par, at par and therefore consider discounts, points, and rebates.** *Rates are based on a scenario with a 780 Credit Score, <60% LTV, Purchase transaction. As of 10/10/2024 – 12:00 PM EST.*

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Market Commentary:

For the week of Oct 4^th to Oct 10^th, interest rates remained flat to slightly higher. “Following the release of a stronger-than-expected September jobs report, the 30-year fixed rate mortgage saw the largest one-week increase since April,” said Sam Khater, Freddie Mac’s Chief Economist. “However, we should remember that the rise in rates is largely due to shifts in expectations and not the underlying economy, which has been strong for most of the year. Although higher rates make affordability more challenging, it shows the economic strength that should continue to support the recovery of the housing market.”

“In the wake of stronger economic data last week, including the September jobs report, mortgage rates moved higher,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association. “While the worst may be over in terms of the rapid, upward movement, it will take new data to put compelling downward pressure on rates,” said Matthew Graham, chief operating officer at Mortgage News Daily. "The larger-than-anticipated gain in the September consumer price index doesn’t signal a reacceleration in inflation, nor will it deter the Federal Reserve from cutting interest rates by 25 basis points at its November meeting," wrote Oxford Economics' Chief U.S. Economist Ryan Sweet. "The Fed needs to continue to normalize interest rates to keep the economy on the path toward a soft landing.

UPDATED Expert mortgage rate predictions for 2024 and 2025 (as of 10/08/2024)

Fannie Mae: Fannie Mae's latest forecast predicts that 30-year mortgage rates will end the year around 6.20% and drop into the 5% range in 2025. By the end of next year, rates could fall to 5.70%.
Freddie Mac: In their September outlook, Freddie Mac researchers said they believe mortgage rates will decline further this year but remain above 6%. They also noted that shifting expectations around Federal Reserve rate cuts could cause some temporary volatility as investors try to figure out what the Fed will do at its upcoming meetings.
The Mortgage Bankers Association: Similar to Fannie Mae, the MBA sees mortgage rates ending 2024 around 6.20% and continuing to trend down throughout 2025. The group thinks rates could end 2025 at 5.8% and hold steady in 2026.
The National Association of Realtors: NAR's quarterly outlook has 30-year mortgage rates ending 2024 at 6.1% and bottoming out around 5.8% toward the end of 2025. After that, we could see rates tick back up to 6.1% in 2026.
Realtor.com: In their mid-year forecast update, which was released in August, Realtor.com economists predict that mortgage rates will end the year at 6.3%.
The National Association of Home Builders: In its latest housing and interest rate forecast, NAHB predicts that mortgage rates will average 6.64% in 2024 and fall to 5.86% in 2025. It also believes rates could ease further in 2026, decreasing to a yearly average of 5.49%.

Fed Watch: Target rate (in bps) possibilities, according to the CME Group (as of 10/10/2024 – 12:30 PM EST):

A weekly economic market update chart titled 'A Quick Look Back,' covering key economic events from October 4 to October 10, 2024, with columns for Event Date, Event Name, Actual Data, Forecast, Previous Data, and Commentary. The first event on October 4 reports that the US economy added 254,000 jobs in September 2024, significantly higher than the forecast of 140,000 and the previous month's upwardly revised 159,000 jobs, indicating strong labor market performance. Also on October 4, the Unemployment Rate for September fell to 4.1%, surprising market expectations that forecasted no change at 4.2%. This marks the lowest unemployment rate in three months. On October 9, Consumer Credit data for August reveals an increase of $8.93 billion, well below the forecast of $12 billion and the previous month’s revised $26.63 billion. Consumer credit rose at a seasonally adjusted annual rate of 2.1%, with revolving credit (such as credit cards) decreasing by 1.2% and nonrevolving credit increasing by 3.3%. On October 10, the Core CPI for September shows a 0.3% month-over-month increase, matching the previous month’s rise and exceeding the 0.2% forecast. Year-over-year, Core CPI increased 3.3%, compared to a 3.2% increase in August, reflecting moderate inflation. Also on October 10, initial jobless claims for the week ending October 5 surged to 258,000, much higher than the forecasted 230,000 and a significant increase from the previous week’s revised figure of 225,000. This marks the highest level of jobless claims since August 2023, highlighting potential challenges in the labor market.

Market Review: Optimal Blue's Production Metrics:

Active single-family inventory since 2015:

10 U.S. Cities With the Lowest Risk of Climate Disasters:

Top 10 Markets Where Home Prices Are Up the Most:

Political Percentages

From 1933-2022, the average annual S&P 500 return with a Republican president and split Congress is 13.7%, while it’s 13.6% with a Democratic president and a divided Congress. The average return slips to 13%/year with a Democratic White House and full Republican Capitol Hill control, and it’s 12.9%/year for the inverse. Full Democratic control is associated with a 9%/year average return, full Republican control averages 4.9%/year. Divided Congress is best.

- Elliot Eisenberg, Ph.D. , Economist

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Interest rate and annual percentage rate (APR) are based on current market conditions as of 10/10/2024, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC, dba Edina Realty Mortgage. Not available in all states. Rate is as of 10/10/2024 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac's economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac's business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an "as is" basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.

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