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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.
Market Commentary
“This week, mortgage rates decreased to their lowest level in over a month,” said Sam Khater, Freddie Mac’s Chief Economist. “Despite just a modest drop in rates, consumers clearly have responded as purchase demand has noticeably improved. The responsiveness of prospective homebuyers to even small changes in rates illustrates that affordability headwinds persist.”
Fed Rate-Cut Outlook:
After the jobless claims data on Thursday, markets are pricing in 74% odds of a quarter-point rate cut at the Dec. 18 Fed meeting, according to CME Group's FedWatch page. That would lower the Fed's benchmark rate to a range of 4.25% to 4.5%.
Yet – even though market confidence in a December rate cut remains high – Wall Street has somewhat reined in expectations for further cuts next year. Markets are currently on the fence between 50 and 75 basis points in rate cuts in 2025, assuming that the Fed does cut in December.
Mortgage rate forecast - as of 12/1/1024:
Current mortgage interest rate trends:
Fed Watch: Target rate (in bps) possibilities, according to the CME Group (as of 12/05/2024 – 12:30 PM EST):
Market Review: Optimal Blue's Production Metrics:
"Real” House Prices – Adjusted with Inflation:
CoreLogic: US Home Prices Increased 3.4% Year-over-year in October:
FHFA Announces Baseline Conforming Loan Limit Will Increase to $806,500
Tariff Totals
61% of the price of a new home is construction, including labor. Of the 61%, 56% (or 34% of the total price) is wages/salaries and 44% (or 27% of the price) is material. 7.3% of materials (or 2% of the total price) are imported. A median new home price of $440,000 means $9,000 in imported materials. Assuming a 30% tariff, that means new home prices rise by, at most, $3,000. - Elliot Eisenberg, Ph.D. , Economist
News You Can Use
- Americans now need to earn $108,000/year to afford a new single-family home, property taxes, insurance — how to step on the US housing ladder even without a 6-figure salary
- 20 Housing Markets Where Homes Will Skyrocket in Value Before the End of 2025
- Jobless claims show extremely low layoffs and little sign of trouble for U.S. economy
- Inflation Adjusted House Prices 1.4% Below 2022 Peak; Price-to-rent index is 8.1% below 2022 peak
- Fed's Barkin: I'm encouraged by where inflation is headed
Interest rate and annual percentage rate (APR) are based on current market conditions as of 12/05/2024, 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 HomeServices Lending, LLC. Not available in all states. Rate is as of 12/05/2024 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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