November Update: Why Mortgage Rates Are Defying Expectations
Why Aren't Mortgage Rates Dropping?
Despite the Federal Reserve lowering key interest rates, mortgage rates have been rising close to 7% for a 30-year fixed loan. Rates had dropped to about 6% in September.
What’s happening: Mortgages are tied more closely to government bond yields than the Federal Reserve’s policy, which explains the divergence.
The strong US economy and uncertainty over future federal policies are also contributing factors.
For 2025: Economists warn that if economic growth and inflation continue to exceed expectations, mortgage rates may remain elevated into 2025.
Bottom line: Predicting what will happen with mortgage rates will be extremely difficult. Whether rates decline and make mortgage more affordable will strongly affect the rest of the housing market.
Fresno County Market Update
The Fresno housing market experienced a slight dip in median home prices, down 4.5% from last month, but prices have remained flat year-over-year. Winter is traditionally a slower season for sales.
Sales trending up: Home sales increased by 5.5% compared to this time last year, a product of about 25% more homes available on the market.
This mixed performance suggests buyers are active, but the market remains sensitive to broader economic trends.
California Housing Outlook
In 2024, existing home sales saw their worst year since the 1990s. One report from the California Realtors Association projects that California will see an increase of 10.5% in sales in 2025, a strong rebound after several slow years.
They predict more homes available for sale and lower mortgage rates will draw more buyers into the market.
However, whether rates will decline significantly next year is very uncertain.
What This Means for Buyers and Sellers
Buyers: While prices are fairly stagnant, mortgage rates remain a hurdle. However, winter traditionally is a good time for buyers since homes remain for sale on the market longer. New construction is also a great option since builders have incentives to make mortgage rates cheaper.
Sellers: If you've hesitated to sell, waiting until spring may be the best choice when more buyers are looking for properties and prices tend to be higher. Lower mortgage rates could also make purchasing your next home easier.