Rates Fall Again, Real Estate Markets Continue to Slow

Happy Friday from Local Mortgage!

More of the same this week as investors continued to shift money out of risker technology stocks and into safer investments, helping to push rates lower for the week. We will end the week down to 6.875% for our best 30-year fixed Conventional scenario with no discount points.

In September, sales of previously owned homes rose a little from August but still were a bit lower than a year ago. The median price of $417,500 was up 2% from last year at a record high for the month of September. Inventory continues to rise, up 5% from a year ago, at the highest level since 2019.

The latest home building data was not encouraging. Overall housing starts in September declined 5% from August, far more than expected, and are running 7% below last year's pace. Single-family starts declined to the lowest level since September 2025, while single-family building permits, a leading indicator of future construction, fell to the lowest level since 2023.

Finally, a survey of home builder sentiment on housing market conditions from the NAHB unexpectedly dropped to 29, the lowest level since 2012, and has remained in negative territory below 50 for thirty straight months. To help generate demand, 66% of builders offered sales incentives in September, while 43% reduced home prices, the most since 2020. Builders cited high mortgage rates, labor shortages, and rising material costs as significant obstacles to increasing new home supply.

The Big Picture: For now, mortgage rates remain caught between competing forces. Investors are continuing to weigh a mix of slowing economic data, stubborn inflation, and global uncertainty. As a result, mortgage rates will probably remain volatile from day to day as investors react to Fed comments, economic data, and geopolitical events. Meanwhile, the housing market continues to face affordability challenges.

Hope everyone has a great weekend and thank you for reading.