John’s Finance Corner: Fed Rate Cuts and Rising Home Prices

John’s Finance Corner: Fed Rate Cuts and Rising Home Prices

As anticipated, the Federal Reserve cut rates last week, while home prices continued to increase in September.

The Federal Reserve continued its policy easing by cutting the Fed Fund Rate by a quarter percent, bringing it to a range between 4.5%-4.75%. It's important to note that the Fed Fund Rate is a short-term rate, often referred to as the overnight rate. Banks use this rate to lend money to each other, and it helps drive other short-term rates. While it doesn't directly impact long-term rates like mortgage rates, investor reactions to Fed policy can influence them. Investors still expect another quarter percent cut at the December meeting, but expectations for cuts next year may be tempered as new economic data comes in after President-elect Trump takes office at the end of January.

The CoreLogic Home Price Index showed that national home prices rose by 0.02% in September and were 3.4% higher than the same time last year. ICE (previously known as Black Knight) also reported that national home values rose by 0.14% in September, 2.9% higher than this time last year. It's typical to see less competition in the fall, and while the reports show growth, the overall numbers have slightly lowered. Local markets have seen price drops in some areas, but overall, appreciation remains healthy, and we should see this trend continue into 2025.

The 10-year treasury has continued its upward path, driving mortgage rates up since the beginning of October. This week is critical for data that will influence where mortgage rates are headed as we approach the end of the year. We will receive CPI and PPI inflation data, initial and continuing jobless claims, and retail sales figures. Keep an eye on the 10-year treasury this week. Any further increases could push the daily average mortgage rate back over the 7% level. The important data will heavily influence the markets and where rates are headed.

Stay tuned for more updates as we navigate these economic developments together.

John Lamberg

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