June 16, 2026 – Agreements

Economic Commentary

We have been on a very consistent merry-go-round this year and it all revolves around the conflict in Iran. It seems like every few days we are close to a breakthrough, but then we hear reports of missiles landing. And even the reports of a breakthrough are conflicting as we hear of an agreement which is really an extension of the pact to temporarily halt hostilities – which has limited but not eliminated the hostilities. One side says we are close, the other says we are not there.  This increases confusion and uncertainty.

One thing the markets do not like is increased levels of uncertainty.  And we have seen the markets reacting to this uncertainty in different ways. The most severe reaction has been seen in the volatility of oil prices as the supply of oil travelling through the Strait of Hormuz has fallen dramatically. The price of oil has increased significantly, yet it falls every few days on reports of this elusive breakthrough. The higher price of oil causes higher inflation which in turn has raised interest rates, a major factor affecting the real estate market.

One sector which has been incredibly resilient has been the stock market. While stock prices fell initially due to the news surrounding the conflict, stock indices have not only recovered these losses, they have also added further gains. While oil prices and interest rates have been riding the merry-go-round, stocks have taken the escalator.  While analysts fret about an inflation fueled recession, apparently stock investors are not too worried. Should we take a clue from the stock market and perceive that better times are right around the corner?  The Fed meets today and it is their first meeting with a new chairman. Most believe that current elevated inflation rates will keep the pause on rate decreases going for quite some time.

Weekly Interest Rate Overview

The Markets. Mortgage rates rose slightly in the past week as events in Iran continued to dominate the headlines.  According to the Freddie Mac weekly survey, 30-year fixed rates rose to 6.52% last week from 6.48% the previous week. In addition, 15-year loans also increased to 5.84%. A year ago, 30-year fixed rates averaged 6.84%, 0.32% higher than today. Attributed to Freddie Mac: “Stronger employment momentum has helped existing home sales reach a five-month high. Importantly, homebuyers are looking past the short-term rate fluctuations and actively entering the market, signaling renewed confidence in homeownership opportunities.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

The same generational shifts reshaping the housing market are changing something even more foundational to American life: driving. It’s well known that younger adults are delaying homeownership under intense affordability pressure. What’s less discussed is that they’re also delaying car ownership and driving less overall. Meanwhile, as more Americans age in place, a growing number of older adults are expected to age out of driving, raising urgent questions about mobility and independence. That quiet retreat from the driver’s seat could have major consequences for the future of housing. Even as demand grows for neighborhoods where daily life can be lived on foot or by transit, most new homes are still being built for a lifestyle that assumes a car is not only desirable but also required. Vehicle miles traveled per capita have declined 2.3% since 2019, according to data from the Federal Highway Administration. And today, the average American drives nearly 5% less than they did two decades ago—proof that the slow fade of car dependency was already underway even before the COVID-19 pandemic rewired daily routines.  The trend is especially sharp among younger adults. From 2001 to 2017, vehicle travel among this group dropped 19%, nearly double the decline seen in their older peers. From 2017 to 2022, the shift accelerated even more dramatically: Daily trips among young adults fell nearly 50%, according to research from UCLA.  And while turning 16 used to be synonymous with a trip to the DMV, it no longer is today. Only 1 in 25 licensed drivers is 19 or younger, a marked decline from a decade ago, according to data from the Department of Transportation. Online shopping, remote work, and the rise of streaming services are all seen as playing a role in these trends.  Fewer willing drivers introduces a huge question for the housing market: Where will these nondrivers live? Transit-oriented development (TOD) is one solution.  TOD is almost exactly what it sounds like: housing and land use designed around transit, to create compact, walkable communities where people can get around without relying on a car.  Source: Realtor.com

A small but growing share of Gen Zers managing to buy a home despite historically unaffordable prices, and when the average age of first-time buyers has climbed to 40. They are outpacing millennials, many of whom also struggled to buy at the same age. They’re less likely to use help from parents and far more likely to be single buyers, especially women. “Gen Zers seem to have learned from millennials,” said Jessica Lautz, deputy chief economist at the National Association of Realtors, which tracks buying trends. She also credits their use of social media for financial planning. “They’re embracing the knowledge that is at hand.”  The rise in the youngest homeowners is noteworthy because of the odds stacked against them. A massive housing shortage has pushed prices to record high unaffordability for both renters and owners. People in their 20s remain a sliver of buyers overall, but they’re growing. The National Association of Realtors found last year 4% of homebuyers were Gen Z, up from 3% the year before. Overall, Gen Z homebuyers had an average household income of $76,000 dollars, according to the Realtors association. And they are financially savvy.  “They’re taking advantage of government [down-payment assistance] programs at higher rates than all other generations,” said NAR economist Lautz. “They seem to be a little more reticent when it comes to student loan debt, which has historically been one of the biggest hurdles for millennials to enter into homeownership.”  Also, the share of single Gen Z buyers is double that of millennials at the same age. “I asked around the office to try and understand what’s happening here and I was reminded, COVID,” Lautz said. “So. I think perhaps delays in getting marriage started, and partners started, could be one of the things going on here for these young adults.”  Source: WAMU 88.5/NPR

Buyers of newly built homes save an average of $25,335 over the first 10 years of ownership compare to buyers of 20-year-old homes. That’s according to new research from Realtor.com, which said the savings are driven by lower energy bills and fewer major repairs. “Homeownership is not a one-time expense, and the ongoing costs of owning a home are where new construction really shines,” said Joel Berner, senior economist at Realtor.com®. “Buyers who focus only on the listing price are missing a significant part of the financial picture.” Realtor.com said the findings show a wide geographic divide, with states in New England offering the greatest advantage and Southern states the least. It identifies 16 metros where a decade of savings from new construction fully erases the price gap with existing homes. New construction savings come in two forms, Realtor.com said — lower utility costs from more energy-efficient construction, and delayed replacement of major systems such as HVAC, roofs, and water heaters.  To help buyers see these savings in action, Realtor.com said it is introducing interactive total cost of ownership content through a dedicated cost of ownership hub and experience on new construction listings, showing personalized 10-year savings estimates on utilities, roof replacement, HVAC, and water heater costs compared to a comparable resale home. Source: MP Daily