September 2, 2025 – Summer is Over?

Economic Commentary

We know we had a summer because we are still sweating from the hot and steamy weather we had on the east coast this year. But it certainly seems like summer has come and gone very quickly this year. Yes, we know that fall does not arrive until the latter part of September, but mentally summer is over after Labor Day. The kids are back in school and summer vacations are a memory at this point.  Plus, each day has gotten shorter as we approach the autumnal equinox, or solstice if you prefer.

Perhaps the fact that we did not have the traditional spring real estate selling season this year explains why summer was so fleeting. There was a pickup during the spring, but it seems that the purchase market was more on a slow and steady pace. With steady home prices and moderately lower mortgage rates, it is hopeful that the fall will bring continued sales activity. Certainly, the statistics show that more Americans are taking advantage of their built-up equity and lower interest rates by refinancing. And there are more listings available for sale than we have seen for the past several years.

We start September off with the usual employment report for the previous month. Yet, this report will carry extra significance for two reasons. First, the July jobs report was very weak, both in jobs added for the month of July and because of an enormous downward revision in the number of jobs added for the previous two months.  All eyes will be on this report also because in two weeks we have a meeting of the Federal Reserve.  If we have another weak employment report, the Fed will be under increased pressure to lower interest rates, despite the fact that we had an uptick in the inflation rate in July. That puts the Fed between a rock and a hard place, which is not a good place to be. The summer may be ending, but the story continues with regard to economic growth vs. defeating the inflation monster.

Weekly Interest Rate Overview

The Markets. Mortgage rates remained near 10-month lows last week as speculation regarding a move by the Fed continued.  According to the Freddie Mac weekly survey, 30-year fixed rates fell slightly to 6.56% last week from 6.58% the previous week. In addition, 15-year loans remained at 5.69%. A year ago, 30-year fixed rates averaged 6.35%, 0.21% lower than today. Attributed to Freddie Mac: “Mortgage rates are at a 10-month low. Purchase demand continues to rise on the back of lower rates and solid economic growth. Though many potential homebuyers still face affordability challenges, consistently lower rates may provide them with the impetus to enter the market.” 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

More than half of all homes in the U.S. housing market are selling for less than their original asking price, according to a new report, as sellers are increasingly forced to offer reductions to attract reluctant buyers. In May, according to data platform Cotality, about 56 percent of listings nationwide sold below their asking price. This number is well above the figures reported in the last five years, when the U.S. housing market went through a homebuying frenzy that sent prices through the roof as buyers fought each other off in bidding wars to get their hands on a limited stock of homes for sale. But things have changed over the past few months, to the advantage of buyers. The U.S. housing market has experienced a rise in listings of for-sale homes in recent months, as many sellers locked into their lower monthly payments have stopped waiting for mortgage rates to come down. The result is that buyers have acquired more negotiating power as they finally have more options in the market, and sellers are facing more competition than they have in years. According to Redfin, there are currently over 500,000 more sellers than buyers in the U.S. housing market.  “Sellers are increasingly reducing asking prices due to a combination of continuing affordability challenges, rising inventory, and weakened buyer demand,” Selma Hepp, chief economist of Cotality, told Newsweek. These price reductions are most common in markets where inventory has risen considerably and demand has slowed compared to the last couple of years, Hepp explained.  Source: Newsweek

Younger generations are looking to the Midwest for homeownership because of the region’s significantly lower housing costs compared to major coastal cities. Many Midwest metros have median home prices well below the national average, while also offering a lower cost of living. As a result, some Midwest cities have higher rates of young homeowners. Younger generations are typically associated with wanting to live a big-city lifestyle, but the high cost of housing on the coasts is driving Gen Z to consider other options.  The Midwest is becoming a more attractive place to plant roots, considering housing costs there can be at least 30% cheaper than living in major coastal metros like New York City or Los Angeles.  In fact, seven out of the 10 most accessible metros for young homeowners are in the Midwest, according to a Consumer Affairs’ analysis of U.S. Census Bureau and Federal Financial Institutions Examination Council (FFIEC) data published July 29.   During the pandemic, many professionals moved to locations with more appealing weather and amenities while working from home. But now that many workers have been forced back to the office and housing costs have continued to rise, those cities don’t always make financial sense for homeowners anymore.   “The Northeast and Midwest dominate, driven by buyers from high-cost metros looking for relief without sacrificing access to jobs and amenities,” Realtor.com chief economist Danielle Hale said in a statement. “Many of these neighborhoods also offer newer homes than the surrounding areas, highlighting the critical role of new and infill construction in meeting today’s buyer demand—even in a tough market.”  Source Fortune

Bank of America’s latest survey found 60 percent of potential and current homebuyers are unsure whether now is the right time to buy. But more than half – 52 percent – said conditions are better than they were a year ago. Matt Vernon, head of consumer lending for Bank of America, said mortgage rates have been sitting around 6 to 7 percent for nearly a year and people are getting used to the fact that that’s the new normal when borrowing money for a home. “And I think folks that own an existing home that would want to buy, that may be carrying a lower rate today, are getting used to the fact that they’re going to potentially pay a higher rate for that next home,” Vernon noted. “And perspective new home buyers also have to understand now that they have to budget for a rate that now sits at this new normal, this trading range of 6 to 7 percent.”  Vernon said more buyers are taking proactive steps – building up savings for down payments, improving credit scores, and talking to loan specialists to get pre-approved. “And you need a real estate professional in that local market that understands how to prepare a borrower, whether they’re new or existing, to be ready to act when they’re ready to act and that’s different,” he shared. “Today you need to be ready to get in on the day of – especially in hotter areas.  Source: Hawaii News Now