Falling Mortgage Rates Boost Housing Market for Now—as Government Shutdown Enters Second Month, Clouding Outlook

Mortgage rates just hit 6.17%—their lowest in more than a year. Also this week, the Fed cut rates again. Together, this could provide some real momentum for the housing market. 

But with an economy sending mixed signals and the government shutdown clouding the data picture, uncertainty is creeping in.  

That’s this week’s big story: Momentum meeting uncertainty. Lower rates are trying to push the housing market forward, and macro risks are pulling it back.

On one side, momentum: Since May, mortgage rates have fallen by 70 basis points, saving a typical buyer about $150 a month—that’s nearly $2,000 a year in payments. 

On the other side, uncertainty: Without the usual labor market data, Fed Chair Jerome Powell compared the Fed’s job to "driving in the fog," saying it might be best to "slow down" on future rate cuts. 

Now, turning to what’s happening on the ground: Our October Housing Trends Report shows this same balancing act of momentum meeting uncertainty, with the market settling into neutral as a result.

Inventory is up 15% from a year ago, but growth has slowed for five straight months. Homes are sitting longer on the market—63 days on average, 5 more than last year—and the median list price steadied—up just 0.4%.

Other data released this week showed flat pending home sales and prices slightly up, albeit at a lower pace. Overall, momentum and uncertainty are in a stalemate, and the market is mostly moving sideways as a result. 

But that’s not the case for every segment of the market. Our new More-for-Your-Money Luxury Housing Report shows where buyers at the top end are gaining the most ground. In several major metros—Atlanta, Denver, and Minneapolis—high-end buyers are now getting more home for the same budget. It's a huge opportunity when paired with the positive momentum on interest rates.  

The other big storyline this week is uncertainty hitting closer to home, due to the government shutdown.

In markets with greater shares of federal workers—especially Washington, DC, and Virginia Beach—new listings fell and buyer search activity dropped by double digits in October. Uncertainty around paychecks has pressed pause on those housing markets. We’ll be sure to keep an eye out as the shutdown continues.

So this fall, it’s momentum versus uncertainty.

Mortgage rates and Fed cuts are helping for now, but the consumer and data outlook remains foggy.

If you’ve been waiting to buy, run the numbers to see if now is your moment. Because rates may be on their way back up soon.

If you’re selling, price to the market and be patient. Buyers will be back, but they’ll be selective.