What A Strong Economy Means & How It Impacts Real Estate

In law enforcement, the acronym BOLO means “Be on the lookout.” We’ll borrow that term for a moment and issue a BOLO alert for a Federal Reserve rate hike. After all, indications are strong that we remain on track for two more hikes before the end of the year. 

The next Federal Reserve meeting is September 26. A hike at that time, experts agree, is likely.

The healthy economy that is spurring talk of a rate hike, however, isn’t permeating deeply into real estate. 

The average rate on a 30-year, fixed-rate mortgage continues its recent trend of relatively modest bumps up and down. The most recent bump: upward to 4.54% from 4.52%. Less mobile are long-term loan rates, which hit a seven-year high. (The average benchmark 30-year rate hit 4.66% in late May. A year earlier, it sat at 3.78%.) 

The dip in home sales this summer isn’t due solely to increased mortgage rates. Also contributing: rising home prices. That’s a combination even a robust economy and healthy job market can’t offset. And according to the National Association of Realtors® (NAR), pending home sales fell in July, the most recent month for which data is available. That marked the seventh straight month that pending homes sales fell on an annual basis.

Some good news from NAR: housing inventory in several important markets is increasing. Denver, San Jose-Sunnyvale-Santa Clara, Seattle, and other real estate hotspots experienced a rise in active listings in July compared to a year ago.

The good news doesn’t end there. Navigating the challenges that a strong economy presents is, in some ways, a nice problem to have. I’m ready to help you develop strategies for prospects and clients that will help them achieve their real estate goals -- buying or selling -- now. Simply give me a call!

Information is accurate on the date of publication. For real estate professionals only. Not for distribution to consumers.