Mortgage rates eased for a third straight week, and then Friday's jobs report came in far stronger than anyone expected. Those two things pull in opposite directions. The short version for Michigan buyers and sellers: the recent dip in rates is real, but it is small, and the strong jobs number makes it more likely the Federal Reserve raises its benchmark rate again in December.
So I would not plan a purchase or a sale around rates falling much further this fall. I would plan around today's numbers, keep an eye on Tuesday's inflation report, and use the slower season to negotiate. Here is what happened and what I would do about it.
Mortgage rates slipped for a third week
Freddie Mac's weekly survey, released Thursday, November 5, showed the average thirty-year fixed rate moving lower for the third week in a row. The fifteen-year average edged down too. Freddie Mac described rates as continuing on a downward path, which helps buyers a little while the economy keeps growing.
Keep that in perspective. Average rates are still well above where they were a year ago, according to the same survey. Three small weekly declines take some pressure off a monthly budget, but they do not change the math of buying a home in a big way.
The Mortgage Bankers Association's weekly survey told a similar story from the lender side. Its chief economist said rates drifted down after the Fed chose not to raise again at its October meeting. Even so, applications to buy a home fell from the week before and were well below the same week last year. The association also reported that the share of applications for adjustable-rate mortgages climbed to its highest level in more than a year, which tends to happen when fixed rates stay high.
The October jobs report was much stronger than expected
On Friday, November 6, the Bureau of Labor Statistics reported that employers added 165,000 jobs in October. CNBC reported that economists had expected fewer than half that many. The unemployment rate edged down, the two prior months were revised higher, and average hourly pay rose faster than forecast.
That is good news if you have been worried about your job or your income. It is less helpful for mortgage rates. Lenders price mortgages off the bond market, and bond investors read strong hiring and rising wages as a sign that inflation could stay elevated. Treasury yields rose after the report.
The reaction in mortgage rates was calm, though. HousingWire reported that average mortgage rates ended Friday about where they started, and that swings in the stock market moved bonds more that day than the jobs data did. One quiet day does not settle anything, but it does mean the three-week improvement survived its first real test.
What the Fed might do in December
The Fed raised its benchmark rate in September and then held steady in late October, as I covered in last week's update. Its next meeting is December 8 and 9. After Friday's report, CNBC reported that futures markets put the odds clearly in favor of another increase at that meeting.
Two things to understand here. First, the Fed does not set mortgage rates. It sets a short-term rate that banks charge each other, and mortgage rates follow the longer-term bond market. Second, markets move ahead of the Fed. If investors already expect an increase in December, much of that expectation is already built into what lenders are quoting today. A December increase would not automatically push mortgage rates up on the day it happens.
What could move rates sooner is inflation data. The October Consumer Price Index comes out Tuesday, November 10. A cooler reading than expected would help. A hotter one could erase some of the past three weeks.
Housing: fewer buyers shopping, more room to negotiate
National housing data this week pointed the same direction as the application numbers. A weekly report from a national brokerage that tracks listings across the country, covering the four weeks that ended November 1, found:
- The median sale price was slightly below a year earlier, the third straight week of small declines after three years of increases.
- Pending sales were at the lowest level in that report's records, which go back to 2021.
- New listings were the fewest since January, while the total number of homes for sale was a bit higher than a year ago.
- More listings carried a price reduction, and fewer homes went under contract in their first two weeks.
Those are national figures, not Michigan figures, and I do not have a new West Michigan report to point to this week. Local numbers can look different, so ask your real estate agent for current figures on your town and price range before you draw conclusions.
What this means in Michigan
If you are buying
Home shopping typically slows between now and the new year, and the national data says there are fewer buyers competing than a year ago. That can mean more room to ask for repairs, help with closing costs, or a closing date that fits your lease. None of that works without a real pre-approval behind your offer, so start there. I laid out the steps in how to get pre-approved for a mortgage in Michigan.
Build your budget on today's rate, not on a hoped-for drop. If the payment works now and rates fall later, a refinance may be an option down the road, depending on your situation at that time. If you are a first-time buyer, look at the Michigan first-time buyer programs before you decide what you can afford. Eligibility depends on your full application and the current program limits, which change.
If an adjustable-rate mortgage has crossed your mind, understand it before you choose it. The rate is fixed for an opening period and can change after that. I would want you to see how and when it can adjust, and compare that with a fixed-rate loan side by side.
If you are selling
Buyers are watching their monthly payment closely, and nationally more sellers are reducing prices. Price the home to the current market on day one instead of testing a high number and chasing it down. Decide ahead of time which concessions you would accept. If you are selling one home and buying another, read how to buy and sell a house at the same time in Michigan and talk with me before you list, because the order of those two transactions shapes your financing.
Next steps this week
- Under contract and not locked: talk with me about rate lock timing before Tuesday morning's inflation report.
- Buying this winter: gather your pay stubs, W-2s, bank statements and photo ID, and start the pre-approval now so you can move when the right house shows up.
- Thinking about an adjustable-rate loan: ask me to walk you through how it adjusts compared with a fixed rate.
- Selling: ask your agent for recent sales and days on market for homes like yours, then set your price and your concession limits.
- Not sure where you stand: call or text me and we will go through your numbers together.