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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
Interest rates remained flat for the week of January 24th to January 30th.
The Federal Reserve on Wednesday hit pause on interest rate cuts in its first key decision of President Donald Trump's second term. Central bank officials opted to keep borrowing costs at a range of between 4.25% and 4.5% as they await further progress on inflation, which showed signs of stalling out late last year. Fed officials reached that conclusion in their latest policy statement, omitting a phrase included in the previous statement that said inflation has "made progress."
Officials have said recently that they're still confident inflation will eventually reach their 2% target, but the central bank won't be able to declare victory anytime soon. Fed Chair Jerome Powell said in his post-meeting news conference that an unexpectedly weakening labor market or inflation slowing "more quickly than anticipated" would put rate cuts back on the table. "We feel like we don't need to be in a hurry to make any adjustments," Powell said.
Fed Watch: Target rate (in bps) possibilities, according to the CME Group (as of 01/30/2025 – 12:30 PM EST):
Market Review: Optimal Blue's Production Metrics:
Sellers Inch Back Into the Market This January
Inflation Adjusted House Prices 1.1% Below 2022 Peak:
Completed Construction
December new homes sales jumped 3.6% M-o-M to 698,000 annualized units. That reduced builder inventory from 8.7 months in November to 8.5 months. However, it's taking homebuilders longer to sell completed homes, 2.8 months in December versus 2.5 months in November. It's because sales of completed units fell 10.1% M-o-M, but sales of units under construction soared 19.6%, and of unstarted houses jumped 20.3%. Completed homes are currently too costly.
- Elliot F. Eisenberg, Ph.D., Economist
News You Can Use
- Fed holds main rate steady as Trump tariff threat poses inflation risk
- Where things currently stand in Trump's confusing flurry of federal funding memos
- Why the U.S. has a home insurance crisis
- US Housing Market 'Underperforming' As Third of Homes Take Price Cut
- GDP grew at a 2.3% pace in the fourth quarter, less than expected
- Housing market hits a key level not seen since 2009
- S&P CoreLogic Case-Shiller Index Reports 3.8% Annual Gain in November 2024
- New Home Sales Increase to 698,000 Annual Rate in December
Interest rate and annual percentage rate (APR) are based on current market conditions as of 01/30/2025, 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. Not available in all states. Rate is as of 01/30/2025 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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