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fter the Federal Reserve’s October 25 rate cut, mortgage rates edged higher. The 30‑year fixed‑rate was 6.33% on Oct. 30, up from 6.27% the day before and from 6.13% before the meeting. Fed Chair Jerome Powell signaled uncertainty about a December cut, suggesting that rates could rise again and that the late‑year spike pattern may recur. If rates climb, 2025 could be the fourth consecutive year of a late‑year surge, following 2022‑24 spikes.
Inflation remains near 3%, but a weakening labor market and the federal shutdown dampen the narrative. The shutdown has hit mortgage‑loan demand: USDA applications fell 26%, and FHA and VA requests slipped. Overall mortgage applications rose 5% for purchases and 7.1% overall in the week ending Oct. 24.
National pending sales were flat in September versus August and down 0.9% year‑over‑year, but regional trends vary: the Northeast saw a 3.1% rise, the South 1.1%, the Midwest fell 3.4%, and the West dipped 0.2%. Sam Williamson says sales will be driven by life events while affordability and inventory shortages restrain demand. Lower rates help but are not a panacea.
On the supply side, new listings increased 4.6% year‑over‑year for the four weeks ending Oct. 26, the largest rise in five months, suggesting sellers are reacting to the rate environment. Overall inventory is up 6.9% YoY, and Redfin’s Homebuyer Demand Index is 5% higher MoM, though 10% below last year.
Freddie Mac’s weekly survey, which predates the Fed meeting, pegged the 30‑year rate at 6.17% as of Oct. 30. The 25‑basis‑point cut on Oct. 29 was welcomed, but Powell’s hawkish tone on a potential December cut left yields hovering at levels that could support a further rise. The pattern of late‑year spikes—seen in 2022 (5.13% to 7.08%), 2023 (7.19% to 7.79%), and 2024 (6.08% to 6.84%)—may repeat if inflation concerns persist and the labor market weakens.
Lisa Sturtevant, chief economist at Bright MLS, sees an opportunity for buyers who are financially ready: “Right now could be a sweet spot for lower rates and more inventory.” However, the lack of government‑released economic data amid the shutdown may delay some purchasing decisions.
