Everyone’s Talking About the Fed Today. Meanwhile, Housing Is Doing Something Else. (With the Latest Data)
In previous posts, we noted how focused the public is on Fed moves, interest rates, inflation, etc. But beneath the headlines, the housing market is showing some interesting signs—some soft, some resilient. Here’s a refreshed look using the most recent data.
Key Recent Data Points
Here are some of the latest housing-market indicators (as of late summer/early fall 2025), along with their key takeaways.
| Indicator | Recent Value / Trend | What It Suggests |
|---|---|---|
| 30-Year Fixed Mortgage Rate | ~ 6.35% (week ending Sept 12) (Reuters); also ~6.35% in Freddie Mac data (week ending Sept 11) (FRED) | This is the lowest in nearly a year. The drop in rates is helping stimulate refinancing activity and slightly improving affordability. |
| Pending Home Sales Index (PHSI) | 71.7 (July 2025, seasonally-adjusted) (Advisor Perspectives) — down ~0.4% from June but up ~0.7% year-over-year (Advisor Perspectives) | Contract activity is more or less flat to mildly improving year-over-year, though slight monthly softness. Because pendings lead closings by ~1-2 months, this provides a glimpse of where existing‐home sales are likely headed. |
| Existing Home Sales | Increased by 2.0% month-over-month in July; regional variation (Northeast, South, West up; Midwest down) (National Association of REALTORS) | A modest rebound in closed transactions. This supports the idea that some buyer demand is holding up (or picking up), especially where conditions are favorable (price, inventory, rate). |
| Home Prices | Up ~ 1.6% year-over-year nationally in August (all home types) (Redfin) | Price appreciation continues, though modest. Not an overheating market, but not yet a collapse; slower growth may help with affordability. |
| Inventory (Active Listings) | ~ 1,098,681 active listings in August 2025, essentially flat with July (slightly down) but up year-over-year vs same period in prior year (FRED) | More homes are on the market compared to last year; supply is loosening somewhat. That tends to put downward pressure on price growth and gives buyers more choices. But inventory isn't exploding — it's increasing gradually. |
| Other Pieces | Refinancing applications jumped (~+57.7%) as mortgage rates fell; overall mortgage applications rose (~+29.7%) (Reuters) | Many homeowners are taking advantage of the slight rate relief to refinance. That helps with household cash flows and may also stimulate related economic activity. But purchase application gains are much more muted. |
What These Trends Mean
Putting this data together, here are several takeaways, plus a few caveats.
What Looks Strong / Resilient
-
Rate decline helping: The drop in mortgage rates (or at least downward pressure) is having a real impact on refinance volume and, to a smaller extent, on purchase activity. That gives breathing room.
-
Year-over-year pending & existing sales slightly up: While month-to-month pendings slipped, they’re higher than a year ago. Combined with existing home sales rising in July, that suggests demand is not collapsing; some momentum is building.
-
Prices still rising modestly: The ~1.6% YoY price gain isn’t dramatic, but it indicates that many markets remain solid, especially where inventory is constrained or the product is desirable (location, condition, etc.).
What’s Weak or Risky
-
Monthly pendings slipping: The 0.4% drop from June to July in pending home sales shows sensitivity to rates, affordability, and perhaps buyer fatigue. If that downward drift continues, closings may soften.
-
Inventory rising: More choices for buyers can help, but it also means more competition among sellers, longer days on market, and possibly downward pressure on prices in weaker sub-markets.
-
Affordability remains a constraint: Even at ~6.35%, mortgage rates are high relative to recent years, and many buyers are stretched. Income growth is helping in some regions, but skipping ahead in rates could re-tighten affordability rapidly.
-
Regional disparities: Some geographies are performing much better than others. The national averages often mask wildly divergent regional realities (cost of land, regulation, and employment growth). Weakness in the Midwest in existing home sales is a warning sign that not all markets benefit equally.
Implications Going Forward
Given both what the Fed is doing (or expected to do) and what housing data are showing, here are what I see as likely scenarios and what to watch:
-
Suppose rates continue to trend down or at least remain stable. In that case, we may see more pent-up demand convert into home purchase contracts, especially in markets where everything else (jobs, inventory, pricing) is reasonable.
-
There might be a gentle uptrend in existing home sales through the fall, supported by the pending home contracts from recent months. But it won’t be a boom unless broader economic conditions (jobs, incomes) stay favorable.
-
Sellers in overheated markets may begin to test pricing boundaries. Homes that are overpriced or in less desirable locations may see a longer time on the market. Homes in good condition and competitively priced will likely continue to sell relatively well.
-
Watch for Fed signals: if the Fed cuts rates (or signals cuts more aggressively), that could further boost mortgage markets—even if the Fed doesn’t directly set mortgage rates. Treasury yields, mortgage spread dynamics, and expectations matter.
-
Also, watch for potential headwinds: employment weakness, inflation resurgence, or renewed tightening in credit markets could dampen buyer enthusiasm even if rates are stable.
Conclusion
So, going back to the original idea: yes, it matters what the Fed is doing—but what’s happening in housing right now shows a mixed but mildly promising picture. The drop in rates is helping. Pending contracts and closings are inching upward year over year. Inventory is loosening, giving buyers more choice.
But it’s not a roaring comeback yet. Affordability still bites. Some markets are holding up better than others. And monthly momentum is fragile.
We should keep our eyes on rates, pendings, regional splits, and whether supply keeps growing.
