Interest Rate & Market Update

The recent mortgage rate trends have not been kind to buyers. After a promising downward trend, we saw a sharp spike in rates last week, which took us back to the levels of mid-August. What caused this sudden change? The latest jobs report came out much stronger than anticipated, leading to a reaction in the bond market, which in turn affected mortgage rates. While the spike in rates is disappointing, it’s important to note that we’re still better off than we were several months ago. Rates had been on a steady decline, and many were optimistic. However, the jobs report pushed us back up in a single day. The average lender is now back in line with mid-August levels, erasing some of the recent gains.

Jobs Report

Logan Mohtashami from HousingWire has pointed out that the labor market plays a critical role in influencing mortgage rates, even more so than inflation. The recent jobs report, while strong, doesn’t indicate that the labor market is breaking. It's still relatively stable, though revisions may come. For now, higher rates are putting pressure on homebuilders. Builders had gained confidence as rates dropped since mid-June, which led to a rise in single-family home permits. This uptick was crucial for keeping residential labor employed. The bond market's reaction to the jobs report may slow this growth, but for now, construction labor continues to rise.

Also Read: The Federal Reserve Cuts Interest Rates For First Time In Years

Interest Rates Went Up In October 2024

A Silver Lining?

Despite the spike in mortgage rates, there are some positive signs for the Arizona real estate market, particularly in Greater Phoenix. September marked a turning point, with demand stabilizing after nine months of decline. Redfin reported a year-over-year increase in pending home sales in 27 of the 50 largest U.S. metros, with Greater Phoenix seeing the biggest jump—a whopping 133% increase.

• Though pending sales are still below pre-pandemic levels, the uptick is encouraging. More buyers are returning to the market as housing costs drop. However, the recent rate increase might slow this trend in the coming weeks.

According to the Cromford Report, there has also been a significant rise in listings under contract, with a year-over-year increase of 13%. However, supply is up even more—by 52%—which means more competition for sellers and less pressure on prices.

Market Trends

Greater Phoenix's real estate market continues to see growth, with approx. 17,170 active listings, marking consistent increases over the past eight weeks. While buyer activity has risen, it's still outpaced by growing supply. Sellers are getting about 98% of their final list price, a decent ratio, though not as strong as earlier in the year.

• The median sales price in Greater Phoenix has increased year-over-year, now sitting at $455,000, compared to $439,990 in October of 2023. However, the number of monthly sales is at its lowest point since 1995, signaling that despite stable prices, fewer transactions are taking place.

The Cromford Market Index (CMI) currently stands at 94.8, indicating a balanced market. However, with supply rising faster than demand, we are edging closer to a buyer's market, especially in cities like Surprise and Buckeye, which have already transitioned into buyer market conditions.

Also Read: Arizona’s Hottest & Fastest Growing Real Estate Markets In 2024

Greater Phoenix's Median House Price Continues To Rise

What’s Next?

As mortgage rates fluctuate and the market balances out, buyers and sellers are facing a unique landscape. If you're a buyer, don’t let the changing rates discourage you—there are still opportunities to find homes with assumable loans, which some of our clients have had success with recently. At Williams Luxury Homes, we guide our clients through these market shifts with expert advice and strategic decision-making. Whether you’re looking to buy or sell, we can help you in this ever-changing market. Reach out to us today for a confidential conversation.

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