With monetary targets (finally) paving the way for lower interest rates, the real estate industry is cautiously optimistic about a year-end upswing.
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Every week in The Download, Inman's Christy Murdock breaks down the week's most-read stories to give you the information you need to take it head on come Monday. This week, the real estate industry is cautiously optimistic about a year-end upswing as financial targets pave the way for interest rates to (finally) fall.
It's rare that a sometimes-calm economic forecaster gets so carried away that it's almost like he's “floating in the dumps,” but this week's economic news seems to have had that effect. Inflation figures are starting to reflect already-falling rent prices, creating conditions that could lead to lower interest rates (at last) and a corresponding rise in the real estate market.
“It's finally happened,” wrote Jay Parsons, a real estate economist who has been pointing out for more than a year that falling rents are a sign of plummeting national inflation.
Special article: “It's finally here”: Slowing inflation paves the way for interest rate cuts
Federal Reserve Chairman Jerome Powell, in testimony to lawmakers, expressed cautious optimism that the economy is making “substantial progress” toward the Fed's 2% inflation goal. “Reflecting this progress, risks to achieving our employment and inflation objectives are becoming more balanced,” Powell said.
Interest rates are trending lower again after spiking after the June 27 presidential debate as bond market investors, who finance most mortgages, become convinced the Fed will cut rates in September.
According to interest rate lock-in data tracked by Optimal Blue, rates on 30-year fixed-rate mortgages began to decline after approaching 7%, reaching an average of 6.96% on July 3. Rates on 30-year fixed-rate conforming loans then fell another 20 basis points to 6.76% as of Thursday, July 11.
On July 5, the CME FedWatch tool put the probability of a September rate cut at 78%, up from 74% on Wednesday and 64% on June 28. By Friday, July 12, futures markets were posting a 94% chance of a September rate cut, with investors pricing in a 52% chance that the Fed will cut rates by 50 basis points or more this year.
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As falling interest rates bring undecided buyers and sellers into the market, they'll need to stay up to date on post-closing rules and best practices. Luckily, Inman's expert contributors are here to provide the practical implementation and deal advice you need right now.
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