The Fed is done raising the Fed Funds Rate and mortgage rates have already reversed course (now headed lower).

You see, the unemployment rate bottomed at 3.4% in April of 2023 and is now up .5% to 3.9% as of October.

When the unemployment rate bottoms out in the cycle (circled in red) and heads higher, it’s a 100% predictor of an economic contraction (gray bars indicate recessions).

This is important in real estate because mortgage rates drop precipitously in recessions.

With the housing market so low on inventory of homes for sale, we expect lower rates and greater affordability to bring buyers off the sidelines and ultimately pressure home prices higher.

This won’t be an immediate drop to 5% mortgage rates.  We will likely see some ups and downs in the months ahead, but today’s unemployment report is a clear indicator that the trend has reversed from higher and higher mortgage rates to lower rates ahead.

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Tim Erickson
P: (652) 451-2273

Mark Henderson
P: (651) 398-3477