What’s Happening With Rates?
If you’ve been watching the headlines, you’ve probably noticed a lot of talk about interest rates, inflation, and the economy. But what does all of that actually mean if you’re buying or selling a home? Let’s break it down in simple terms.
Rents Are Cooling Off
One of the biggest factors that drives inflation (and ultimately interest rates) is shelter aka what we all pay to live somewhere. The latest rent data shows that prices are rising much slower than normal. For example, in July, rents only went up 0.2%, when historically they tend to jump closer to 0.7%.
That may sound small, but it’s a big deal. Slower rent growth means inflation should continue to ease, and that’s exactly what the Fed (the group that sets rate policy) wants to see.
What the Fed Is Thinking
Speaking of the Fed, one of their key members, Neel Kashkari, recently said he expects inflation to come back down to the target 2%. He also mentioned that the job market isn’t as strong as it once was, with fewer businesses doing big hiring pushes. Translation: the economy is slowing, which is actually good news for interest rates.
Kashkari has been in favor of rate cuts. Meaning, lowering rates, which could give future buyers some breathing room. While these things take time to play out, the tone is shifting in the right direction.
The Bigger Economic Picture
The Conference Board (think of them as economic scorekeepers) reported that the overall economy is slowing down, too. Growth is expected to be modest in 2025, around 1.6%. That’s not a recession, but it’s also not a runaway economy. And here’s why that matters: slower growth often supports lower interest rates, which makes mortgages more affordable.
What to Watch Next Week
There are a few upcoming reports worth keeping an eye on:
Mortgage applications (shows how many buyers are stepping in)
Home sales reports (tells us how the housing market is moving)
PCE inflation data (the Fed’s favorite measure of inflation)
These will all give us more clues about where rates may head.
What This Means For You
If you’re a buyer: the market is shifting in your favor. Slower rent growth and a softer economy point toward easing rates down the road. Pair that with today’s extra negotiating power from sellers, and you’ve got opportunities.
If you’re a realtor: this is your chance to educate clients who are nervous about “high rates.” Help them see the bigger picture, today’s rates won’t be forever, and market conditions are creating windows for buyers to negotiate credits and better deals.
Want to chat through how this plays out for your clients? Call me. I’ll walk you through it step by step so you can be their trusted guide in today’s market.