Rates Held as the Economy Came in Hot

Last week the economy came in hot, oil spiked on a conflict half a world away and mortgage rates finished almost exactly where they started. That is the whole story and almost nobody is telling it that way.

Part One: The national week

The jobs report blew past expectations. August payrolls came in at 162,000 against a forecast near 56,000. Unemployment held at 4.1 percent and wage growth stayed contained at 3.1 percent.

And mortgage rates moved one basis point. Short-term yields jumped on renewed talk of a Fed hike, but the 10-year Treasury, which actually drives mortgage pricing, barely budged. Fear of a hike is not the same as a repriced mortgage.

Freddie Mac ticked up to 6.71 percent, about $15 a month. The week's real pressure on rates came from oil, up roughly 8 percent on Middle East escalation, not from the economy.

Read plainly: the economy came in stronger than expected and mortgage rates absorbed it. For anyone still waiting on a big drop, last week was a live demonstration that it is not coming from good economic news.

Part Two: The local picture

The price spectrum widened all the way out. Midweek brought the least expensive listings I have tracked all summer, in the low $300,000s. By Friday the board carried new listings well past a million. In one week, buyers at nearly every budget got new options.

Sellers still are not panicking. Four straight sessions closed with no new price cuts anywhere in the towns I watch. Montgomery County's median sits near $516,500 with 19 days on market and Philadelphia metro closed sales remain up 6.1 percent year over year with active listings up 12.4 percent.

Buyers are still buying. Purchase applications rose in a week when rates rose and Freddie Mac's chief economist called purchase demand "relatively stable."

One honest caveat: eight straight sessions have passed without a listing in my watch areas flipping to Pending. Contracts take days to post and a holiday week slows everything, so this may be nothing. If it has not changed by midweek, it is worth watching.

Part Three: Guidance for September 7 through 12

Three dates matter. Tuesday the 8th is the first bond session after the long weekend, so the rate indexes finally catch up to Friday's jobs report. Thursday the 10th brings the Freddie Mac survey. Friday the 11th at 8:30 a.m. brings August inflation, the biggest event of the week, five days before the Fed meets.

Realtors:

Refresh every active buyer's pre-approval Tuesday morning, before Friday's inflation number rather than after.

If a listing is drawing showings but no offers, look at the layout before you cut the price again. That is often a financing problem, not a pricing one.

Buyers:

Get fully pre-approved before Friday. Last week proved waiting for a rate drop is not a plan, because the drop did not come even when it could have.

Shop more than one lender. Published indexes quoted the same 30-year as much as 20 basis points apart last week, about $60 a month on a $450,000 loan for an identical borrower.

How I can help

Refreshing pre-approvals before Friday: I re-quote the same day a number moves and my pre-approvals are fully underwritten rather than a soft pull and a hopeful email. When we write an offer, the listing agent can call me and I will pick up.

Showings but no offers: renovation financing lets a buyer fold the fix into the purchase, which turns "I love it but it needs work" into an offer. If a listing has an odd bathroom count or a dated kitchen, send it to me before the next price cut.

Shopping more than one lender: I will put the 30-year, the 15-year and an adjustable side by side so a buyer sees the real trade instead of guessing. If someone else beats me honestly, I will say so.

The takeaway

The economy came in strong and mortgage rates held. Inventory widened across nearly every price point. Sellers held their prices and buyers kept buying.

If you are waiting for perfect conditions, they do not arrive. The question is never whether rates are low. It is whether the payment works for your life and that is a question I can answer in an afternoon.