Oct. 25th FED Meeting

As expected, the FED held the Federal Funds rate unchanged at 5.25% for the third time in a row. The FED's seemingly lack of tough discussions on inflation has spurred confidence in the bond market that the FED will continue to leave rates untouched for some time to come. While inflation is the most heavily weighted measure of economic stability, there is growing confidence that past rate hikes will continue to add pressure to the latest inflationary numbers and hopes that inflation will fall to a more comfortable target of 2-3% over the coming months.

What does this mean for mortgage interest rates?

If investors feel that the FED will leave rates unchanged and inflation can be held in check, then mortgage backed bonds will continue to be attractive. Thus, mortgage interest rates in the near term will remain level if not see a small drop. Housing sales will remain strong while some areas in the country will continue to see a decline in housing prices. Lower rates and cheaper housing is a good recipe for continued strength in the housing market.

How does this apply to Austin?

Housing prices in Austin have not seen the recent declines that the rest of the country is experiencing. Our market continues to see a rise in sales and thus in prices. However, lower interest rates will continue to impact sales regardless of the rising prices. If interest rates decline over the next few weeks there will be an increasing opportunity for buyers to pull the trigger. Nonetheless, there appears to be no end in sight for the booming housing market for Austin.