Sacramento housing market update for July 24: Fed rate hike incoming

Sacramento housing market update for July 24: Fed rate hike incoming

PHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiIHNyYz1odHRwczovL3N0YXRpYy5teWZpbmFuY2UuY29tL3dpZGdldC9teUZpbmFuY2Vfdmlld3BvcnRfZGV0ZWN0aW9uLmpzPjwvc2NyaXB0PjxzY3JpcHQgYXN5bmMgdHlwZT0idGV4dC9qYXZhc2NyaXB0Ij5teWZpV2F0Y2hXaWRnZXQoJ215ZmlXaWRnZXRfMTUnKTtteWZpV2F0Y2hXaWRnZXQoJ215ZmlXaWRnZXRfOCcpO215ZmlXYXRjaFdpZGdldCgnbXlmaVdpZGdldF8xNS4xJyk7PC9zY3JpcHQ+Lauren Williamson is the Financial and Home Services Editor for the Hearst E-Commerce team. She previously served as Senior Editor at Chicago magazine, where she led coverage of real estate and business, and before that reported on regulatory law and financial reform for a magazine geared toward in-house attorneys. You can reach her at [email protected] Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.It’s been a nail-biter of week for Sacramento homebuyers: Mortgage rates bounced back to the uppermost reaches of the 6% range last week and will likely stay there until the next big economic news comes down: On Wednesday, the Federal Reserve is expected to impose its final rate hike of this inflationary cycle.The Fed has raised the benchmark borrowing rate for banks 10 times in the past 16 months as it tries to reel in out-of-control inflation. The most recent inflation data shows that its efforts finally seem to be working. Consumer prices rose only 3% in June, the lowest increase since March 2021. That’s a third of what it was last summer.All signals point to a quarter-point Fed rate hike on Wednesday, which will cap off a historically aggressive streak of hikes. That’s good news for borrowers, since every time the federal funds rate goes up, interest rates on products like mortgages tend to go up too. If the Fed does indeed halt the campaign after this, expect mortgage rates to begin dropping during the latter half of the year.As it stands, the average for a 30-year fixed-rate mortgage is 6.98%, while the average 15-year fixed-rate mortgage is at 6.35%, according to Mortgage News Daily. The average for a jumbo mortgage stands at 6.98%, and the average for a 5/1 ARM, meanwhile, is 6.96%. Nonetheless, it is possible to find better mortgage rates by considering offers from various lenders, springing for discount points, and improving your credit score.Sacramento housing market trendsIf you’re shopping for a home in Sacramento these days, you have to be quick: The median time on the market for listings was just seven days in June, according to data from the Sacramento Association of Realtors. That’s largely because inventory is so limited right now. There were 1,263 total listings in June, down a stunning 43.5% from the same period last year.Redfin, meanwhile, gives Sacramento a “Compete Score” of 87 (with 100 being the most competitive score) right now, which translates to a very competitive market. For comparison, Roseville has a Compete Score of 80 and Elk Grove has a Compete Score of 84. Homes are selling, on average, for 1.6% above list price, with homes in the hottest neighborhoods regularly selling for 5% above list price.Are housing prices dropping in Sacramento?The median sale price for existing single family homes in Sacramento was $530,000 in June, which is down 5.4% from June 2022. The median sale price on existing condos in June was up 5.5% year over year. Nationally, the median existing home price in June was $410,200, a 0.9% drop from a year ago. Because inventory remains so tight in Sacramento, home prices are unlikely to drop substantially more anytime soon.Fed rate hike: The impact on mortgage ratesThe one thing that could help loosen up the squeezed inventory in Sacramento: a drop in mortgage rates. That’s why all eyes are on the Fed this week.The Fed has raised the benchmark borrowing rate from almost zero in March 2022 to between 5%-5.25%, as of its May 2023 meeting. It’s the first time in history that it’s raised interest rates so much in such a short period of time. The ripple effect on consumer lending has been tremendous.While the Fed doesn’t set interest rates on products like mortgages and credit cards, its actions affect them. Mortgage rates in particular closely track the 10-year Treasury yield, which usually rises when the Fed increases the benchmark borrowing rate. As a result, 30-year fixed-rate mortgage rates have more than doubled over the past couple of years from the historically low rates of 2020 and 2021, when rates plummeted below 3%.After pausing the streak of hikes at its June meeting, the Fed is set to impose one more hike before ending the campaign. In addition to the positive inflation report released last week, the June jobs report also showed slight softening, which means the Fed’s policy moves are working. That report, which came out July 7, showed that 209,000 new jobs were added in June — the smallest gain in two-and-a-half years. If these trends continue, mortgage rates could soon start trending downward.Housing market trendsHousing inventory continues to be at historic lows since homeowners who snagged ultra-low mortgage rates during the pandemic are in no rush to move on. New listings were down 25% year over year for the four weeks ending July 16, while the total number of homes on the market was down 16%, according to Redfin. That’s the biggest decline in 18 months. Housing prices, meanwhile, rose 2.1%, the second consecutive increase after five months of falling prices. The limited inventory has kept prices fairly steady since demand in many markets outstrips supply.”The first half of the year was a downer for sure with sales lower by 23%,” said National Association of Realtors Chief Economist Lawrence Yun. “Fewer Americans were on the move despite the usual life-changing circumstances. The pent-up demand will surely be realized soon, especially if mortgage rates and inventory move favorably.”Homebuyers watching mortgage rates and waiting for the perfect moment to strike might not want to wait too long. Many economists predict an incoming credit crunch — when banks restrict borrowing to steady their finances — which would make it harder to get a mortgage. Comparing rates between multiple lenders will help you find the best loan for your situation. 30-year fixed mortgage interest ratesOn average, the interest rate for a 30-year mortgage on July 24 was 6.98%, up from 6.89% on July 14. 15-year fixed mortgage interest ratesOn average, the interest rate for a 15-year mortgage on July 24 was 6.35%, up from 6.30% on July 14. Jumbo mortgage interest ratesOn average, the interest rate for a 30-year fixed rate jumbo mortgage on July 24 was 6.98%, up from 6.89% on July 14. 5/1 adjustable-rate mortgagesOn average, the interest rate for a 5/1 ARM on July 24 was 6.96%, up from 6.94% on July 14.What determines mortgage rates?Mortgage rates are influenced by a variety of factors, including:Your credit scoreDown paymentYour debt-to-income ratio (DTI)The type of loan you’re gettingLoan termInterest rate type (fixed vs. adjustable)Inflation and the overall economyThe Federal Reserve (which doesn’t set mortgage rates, but it certainly influences them)APR vs. interest rateIf you’re currently shopping for a mortgage or considering refinancing, you’ve probably wondered why the quoted interest rate isn’t the same as the APR. That’s because the loan’s interest rate is what you pay the lender to borrow the money, while the APR (annual percentage rate) encompasses both the interest rate and all loan-related fees. Loan-related fees can include:Mortgage broker feesLoan origination feesMortgage insurance premiumsSome closing costsThe APR, therefore, is a truer measure of what it will actually cost you to borrow money to buy a home.Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was reviewed by Lauren Williamson, who serves as the Home and Financial Services Editor for the Hearst E-Commerce team. Email her at [email protected].

Lauren Williamson is the Financial and Home Services Editor for the Hearst E-Commerce team. She previously served as Senior Editor at Chicago magazine, where she led coverage of real estate and business, and before that reported on regulatory law and financial reform for a magazine geared toward in-house attorneys. You can reach her at [email protected] Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.It’s been a nail-biter of week for Sacramento homebuyers: Mortgage rates bounced back to the uppermost reaches of the 6% range last week and will likely stay there until the next big economic news comes down: On Wednesday, the Federal Reserve is expected to impose its final rate hike of this inflationary cycle.

The Fed has raised the benchmark borrowing rate for banks 10 times in the past 16 months as it tries to reel in out-of-control inflation. The most recent inflation data shows that its efforts finally seem to be working. Consumer prices rose only 3% in June, the lowest increase since March 2021. That’s a third of what it was last summer.
All signals point to a quarter-point Fed rate hike on Wednesday, which will cap off a historically aggressive streak of hikes. That’s good news for borrowers, since every time the federal funds rate goes up, interest rates on products like mortgages tend to go up too. If the Fed does indeed halt the campaign after this, expect mortgage rates to begin dropping during the latter half of the year.As it stands, the average for a 30-year fixed-rate mortgage is 6.98%, while the average 15-year fixed-rate mortgage is at 6.35%, according to Mortgage News Daily. The average for a jumbo mortgage stands at 6.98%, and the average for a 5/1 ARM, meanwhile, is 6.96%. Nonetheless, it is possible to find better mortgage rates by considering offers from various lenders, springing for discount points, and improving your credit score.
Sacramento housing market trendsIf you’re shopping for a home in Sacramento these days, you have to be quick: The median time on the market for listings was just seven days in June, according to data from the Sacramento Association of Realtors. That’s largely because inventory is so limited right now. There were 1,263 total listings in June, down a stunning 43.5% from the same period last year.Redfin, meanwhile, gives Sacramento a “Compete Score” of 87 (with 100 being the most competitive score) right now, which translates to a very competitive market. For comparison, Roseville has a Compete Score of 80 and Elk Grove has a Compete Score of 84. Homes are selling, on average, for 1.6% above list price, with homes in the hottest neighborhoods regularly selling for 5% above list price.Are housing prices dropping in Sacramento?The median sale price for existing single family homes in Sacramento was $530,000 in June, which is down 5.4% from June 2022. The median sale price on existing condos in June was up 5.5% year over year. Nationally, the median existing home price in June was $410,200, a 0.9% drop from a year ago. Because inventory remains so tight in Sacramento, home prices are unlikely to drop substantially more anytime soon.Fed rate hike: The impact on mortgage ratesThe one thing that could help loosen up the squeezed inventory in Sacramento: a drop in mortgage rates. That’s why all eyes are on the Fed this week.The Fed has raised the benchmark borrowing rate from almost zero in March 2022 to between 5%-5.25%, as of its May 2023 meeting. It’s the first time in history that it’s raised interest rates so much in such a short period of time. The ripple effect on consumer lending has been tremendous.While the Fed doesn’t set interest rates on products like mortgages and credit cards, its actions affect them. Mortgage rates in particular closely track the 10-year Treasury yield, which usually rises when the Fed increases the benchmark borrowing rate. As a result, 30-year fixed-rate mortgage rates have more than doubled over the past couple of years from the historically low rates of 2020 and 2021, when rates plummeted below 3%.After pausing the streak of hikes at its June meeting, the Fed is set to impose one more hike before ending the campaign. In addition to the positive inflation report released last week, the June jobs report also showed slight softening, which means the Fed’s policy moves are working. That report, which came out July 7, showed that 209,000 new jobs were added in June — the smallest gain in two-and-a-half years. If these trends continue, mortgage rates could soon start trending downward.Housing market trendsHousing inventory continues to be at historic lows since homeowners who snagged ultra-low mortgage rates during the pandemic are in no rush to move on. New listings were down 25% year over year for the four weeks ending July 16, while the total number of homes on the market was down 16%, according to Redfin. That’s the biggest decline in 18 months. Housing prices, meanwhile, rose 2.1%, the second consecutive increase after five months of falling prices. The limited inventory has kept prices fairly steady since demand in many markets outstrips supply.”The first half of the year was a downer for sure with sales lower by 23%,” said National Association of Realtors Chief Economist Lawrence Yun. “Fewer Americans were on the move despite the usual life-changing circumstances. The pent-up demand will surely be realized soon, especially if mortgage rates and inventory move favorably.”Homebuyers watching mortgage rates and waiting for the perfect moment to strike might not want to wait too long. Many economists predict an incoming credit crunch — when banks restrict borrowing to steady their finances — which would make it harder to get a mortgage. Comparing rates between multiple lenders will help you find the best loan for your situation.
30-year fixed mortgage interest ratesOn average, the interest rate for a 30-year mortgage on July 24 was 6.98%, up from 6.89% on July 14. 15-year fixed mortgage interest ratesOn average, the interest rate for a 15-year mortgage on July 24 was 6.35%, up from 6.30% on July 14. Jumbo mortgage interest ratesOn average, the interest rate for a 30-year fixed rate jumbo mortgage on July 24 was 6.98%, up from 6.89% on July 14. 5/1 adjustable-rate mortgagesOn average, the interest rate for a 5/1 ARM on July 24 was 6.96%, up from 6.94% on July 14.What determines mortgage rates?Mortgage rates are influenced by a variety of factors, including:Your credit scoreDown paymentYour debt-to-income ratio (DTI)The type of loan you’re gettingLoan termInterest rate type (fixed vs. adjustable)Inflation and the overall economyThe Federal Reserve (which doesn’t set mortgage rates, but it certainly influences them)APR vs. interest rateIf you’re currently shopping for a mortgage or considering refinancing, you’ve probably wondered why the quoted interest rate isn’t the same as the APR. That’s because the loan’s interest rate is what you pay the lender to borrow the money, while the APR (annual percentage rate) encompasses both the interest rate and all loan-related fees. Loan-related fees can include:Mortgage broker feesLoan origination feesMortgage insurance premiumsSome closing costsThe APR, therefore, is a truer measure of what it will actually cost you to borrow money to buy a home.
Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was reviewed by Lauren Williamson, who serves as the Home and Financial Services Editor for the Hearst E-Commerce team. Email her at [email protected].

https://www.kcra.com/article/sacramento-housing-market-fed-rate-hike/44642831

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