New Market Reports + News
Post-Election Economic Outlook: Implications for Interest Rates and the Housing Market
If you’ve been sitting on the sidelines waiting to see what happens post-election in the real estate market, here are a few key insights:
The New Administration’s Impact
The new administration is expected to bring a pro-business approach, but economists predict a challenging period ahead for the real estate industry.
Current Mortgage Rates
In response to the election, mortgage rates have spiked. As of Nov. 6, the average 30-year fixed-rate mortgage rose to 7.13%, its highest since July, compared to 7.04% the previous day. Rates have since worsened, reaching levels similar to July’s highs.
Federal Reserve Decisions
The election is unlikely to alter the Federal Reserve’s immediate plans. Economists expect a 25 basis-point rate cut soon, though there’s uncertainty about further cuts in December. Markets now show a 33% chance the Fed may delay additional reductions, a shift from earlier projections of consecutive cuts.
Following the election, economists anticipate increased volatility in mortgage rates. Lisa Sturtevant, Chief Economist for Bright MLS, notes that the new administration’s fiscal policies may lead to “rising and more unpredictable mortgage rates” through 2025. This is supported by recent upticks in 10-year Treasury bond yields. Additionally, inflationary pressures could deter the Fed from further cuts, potentially making homeownership more challenging for first-time and moderate-income buyers.
Housing Market Projections
So, how does this affect the housing market?
Despite recent challenges, there is optimism for a rebound. Lawrence Yun, Chief Economist for the National Association of Realtors, forecasts a 9% increase in existing home sales in 2025, followed by a 13% rise in 2026. New home sales are also expected to grow by 11% in 2025 and 8% in 2026. These projections hinge on stabilizing mortgage rates, continued job growth, and an increase in housing inventory. However, Yun cautions that the “new normal” for 30-year mortgage rates may settle between 5.5% and 6.5%, influenced by government borrowing levels and fiscal policies.
Tahoe Market Insight
In Tahoe, we’ve seen inventory start to sell post-election, aligning with the usual slower pace of Q4 in our market. Properties priced strategically are being snatched up by buyers who have been closely watching the market and waiting for the right opportunity. For buyers, there’s significant room to negotiate on homes that remain on the market as we approach the holiday season.
If you’re curious about how to capitalize on this market, give me a call!
Current Homebuying Demand: A Macro View
Nationally, there has been a notable uptick in homebuying interest in the wake of the election. Freddie Mac reports that the 30-year fixed-rate mortgage averaged 6.78%, ending a six-week streak of increases. This stabilization, coupled with the election’s conclusion, has led to a 15% rise in home touring activities, as noted in Redfin’s demand index. However, Odeta Kushi, Deputy Chief Economist at First American, warns that significant rate declines are unlikely in the near term. Rates are expected to “modestly ease through 2025” as the Federal Reserve continues its rate-cutting cycle.
Hope this Provided Some Context!
Let’s take a look at last month’s reports.
Check out the latest November 2024 Lake Tahoe Market Report (data from October 2024).
