September 23, 2025 – The Fed Has Spoken

Economic Commentary

Finally. After months of back and forth and speculation, the Federal Reserve has lowered its benchmark rate by 0.25%. While the August job numbers combined with the substantial downward revisions of jobs added during the past year pretty well clinched the fact that the Fed was likely to lower rates, there was still a decent amount of speculation swirling around the financial markets. And as we mentioned last week, the amount of the decrease was also up in the air.  The fact that it has been nine months since the last time the Fed lowered rates added to the intrigue – in addition to the pressure being applied from various members of the administration.

 With this action and their accompanying statement, it is clear that the Fed acknowledges that the economy is slowing, and the risk of a recession is as great as the risk of inflation. By themselves, each of these future scenarios would be detrimental to our standard of living. But having both for any substantial period of time would be absolutely devastating. Slow growth and inflation are an unwelcomed situation as we have also previously written about the risks of stagflation. But a recession accompanied by inflation would be a completely different story.

 The fact that the Federal Reserve is balancing both risks right now is evidence of how hard a job the Fed has for the foreseeable future. How do we bolster the economy without igniting inflation? The implementation of higher tariffs makes the job even more complicated. Theoretically, these tariffs will bolster our economy in the long run, but in the short-term, higher inflation and decreased consumer consumption seem to be in the cards. Speaking of the short-term, the markets barely reacted to the Fed’s decision. This reaction was expected as the Fed’s action was not a surprise, and long-term interest rates had previously fallen in anticipation. Let’s hope the Fed’s balancing act navigates us through without experiencing these negative scenarios in the long run.

Weekly Interest Rate Overview

The Markets. The decline in mortgage rates continued as the Fed meeting approached. After the Fed lowered their benchmark rate, mortgage rates did not continue to decline as the market had reacted in anticipation of the move.  According to the Freddie Mac weekly survey, 30-year fixed rates fell to 6.26% last week from 6.35% the previous week. In addition, 15-year loans decreased to 5.41%. A year ago, 30-year fixed rates averaged 6.09%, 0.17% lower than today. Attributed to Freddie Mac: “Mortgage rates decreased yet again this week, prompting many homeowners to refinance. In fact, the share of mortgage applications that were refinances reached nearly 60%, the highest since January 2022.” 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 most recent report on investor activity in the US housing market was published by Cotality. Although it decreased somewhat in Q2 of 2025, investor activity was still high when compared to previous years. Per the recent report, in January, some 32% of single-family home purchases were made by investors. Although investors’ proportion had decreased to 29% by June, it was still more than it was at the same point in 2024, when they accounted for 25% of all acquisitions. As increased inventory levels, high property prices, and elevated mortgage rates continue to keep many first-time buyers out of the rental market, it is evident that investors are stepping in to fulfill the strong demand. “Investors expanded their market presence significantly in 2025, building on historically high levels,” said Thom Malone, Principal Economist at Cotality. “This demonstrates their resilience in a high-price, high-rate environment. As these adverse conditions are expected to persist, investors are well positioned to meet rental demand. Their tendency to buy with all cash means high interest rates are less of a deterrent. Plus, current high prices can be offset by strong rental returns.”   Investor buying levels will likely remain constant through the end of 2025. Investors purchased about 85,000 properties a month this year, which is almost the same as the first-half 2024 average of 84,000 units per month. A return to the 2022 buy numbers, when monthly investor purchases averaged 120,000, is improbable without comparable price appreciation, even though the investor portion is bigger. However, a decrease in owner-occupied transactions is primarily responsible for the market’s increased proportion of investor acquisitions.  The current surge in investor activity has been led by medium-sized investors, who now hold between 10 and 99 properties.  Source: Mortgage Point

In a sign of home sellers’ frustration over how long it’s taking to find a buyer, more owners are opting to pull their property off the market rather than lower the asking price. That’s according to a recent report from Realtor.com finding that so-called delistings, or homes taken off the market without having been sold, were up 38% in June since the start of 2025 and 48% from a year ago. “Fewer and fewer sellers are deciding to enter the market, and increasingly more are deciding to jump out,” Jake Krimmel, senior economist at Realtor.com told CBS MoneyWatch.  When homeowners are eager to sell a property, they typically lower the price in order to offload it quicker. However, those who are not up against the same type of time constraints may be willing to wait it out longer — especially if they’re benefiting from a favorable mortgage rate.  “Maybe you’re locked into payments that are relatively affordable for you,” Krimmel said. “You would prefer to sell, but not at a price that you’re not comfortable with.” Another factor is playing into the delisting trend, experts said — the surge in housing prices during the COVID-19 pandemic, when the housing market was red hot. As newly remote workers flocked to areas like Austin, Texas, home prices rose at record levels, giving sellers a chance to cash in. While the market has since cooled substantially, sellers’ pricing expectations have been slower to catch up. “Maybe we’ve gotten a bit spoiled by very high home prices over the last many years, but we are seeing some softness in the market right now,” Nancy Vanden Houten, lead U.S. economist at Oxford Economics, told CBS MoneyWatch.  Source: MoneyWatch

Nationwide reported that recent first-time buyers found buying a home more stressful than some other major life milestones.   Seventy-one percent said it was more stressful than finding their first job, 68% said it’s more stressful than meeting new people, 59% said it ranked above planning a wedding and 56% above finding a long-term romantic partner. First-time buyers are making sacrifices to purchase their first home, including 32% who report commuting further to work or other daily locations, 31% who are buying a home in a location that wasn’t their first choice and 28% who are buying a home with fewer amenities. A considerable majority of first-time buyers, at 83%, believe their home is an asset instead of a liability. A majority also believe that owning a home has improved their sense of control over the future (86%), owning a home is one of the most important achievements one can make in their life (84%) and owning a home has improved their sense of control over finances (82%). First time buyers are seeing stressors beyond just their purchases, too. In response to the prompt: I finally understand the true terror of the phrase ‘unexpected repairs,” — 69% answered yes. Sixty-seven percent each said yes to the prompts that “I’ve become a professional at Googling ‘how to fix [insert problem here]’” and “I finally understand all my parents’ frustrations with my childhood home.”  Source: Nationwide