Soft Landing in Sight? Inflation, Rates, and California’s Housing Market in Focus

Anya’s Market Bites:

The U.S. economy is showing positive signs of progress toward the Federal Reserve's target inflation, despite the recent strong jobs report keeping mortgage rates elevated. September's inflation fell to 2.4% year-over-year, the lowest since March 2021, although core inflation remains high due to housing costs and wage growth. While the odds of a large rate cut in November have diminished, the market still expects two 25 basis-point cuts in 2024, offering potential relief.

• Mortgage Rates: Freddie Mac’s 30-year fixed-rate mortgage averaged 6.32%, with other sources quoting rates closer to 6.6%.

• Inflation Progress: The PCE Index shows core inflation below 3% for seven consecutive months, offering a more positive outlook.

• Interest Rate Expectations: Market consensus has adjusted from expecting larger cuts to anticipating two smaller 25 basis-point rate cuts in 2024.

In California, the housing market is experiencing an uptick in inventory, with nearly 49,000 homes available for sale, reaching levels not seen since before the pandemic. Homes in the $400,000 to $800,000 range have seen consecutive year-over-year gains in new listings, giving first-time buyers more opportunities, even as the typical fall slowdown begins.

• California Housing Market: Pending sales rose by double digits compared to the same period in October 2023, as buyers are taking advantage of the additional inventory.

• Rising Home Equity Loans: Homeowners are tapping into home equity at the fastest rate since 2008, with major California metros like Los Angeles, Anaheim, and San Diego leading in loan activity.

(Source: CAR.org)

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Anya Derebenskiy

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