Powell said Sept. Markets heard today

This morning we received the clearest signal yet that a pivot is coming…one that will come in clutch for your real estate strategy…assuming inflation behaves. Rates are already reacting to what Powell said, so it may not matter what he actually does. Or it might, in a really big way. Let’s explore the possibilities. 

“Strong Economy” = Fake News 

Revisions to jobs numbers basically erased the ‘strong economy’ narrative…which is exactly what we needed. Trump has been barking for lower interest rates since day 1 and for months we’ve been watching this feud play out between him and Powell. The president kept demanding lower rates while Powell kept raising concerns about inflation, specifically in light of the new tariffs.  

Then we got that weak jobs number. 

And Trump fired the head of the BLS! 

It felt off. For a number of ethical reasons, but the one I’ll focus on today is that a weak labor market is exactly what we’ve needed to be revealed in order for the Fed to start cutting rates. That jobs report was exactly what Trump needed to support his demands but…it made him mad?!  While many think Powell is a monster out to ruin the economy, the reality is the Federal Reserve simply has a dual mandate. Keep inflation under control while supporting the labor market. Inflation has not been under control and the jobs report kept coming out, month after month, showing blockbuster numbers. Powell was stuck, until he wasn’t.  

The weak jobs report came out and so did he. Citing signs of a weakening in the labor market, Powell confirmed that the Fed expects to begin cutting rates at their September meeting. 

Markets cut rates today. 

We immediately saw a 25-30 basis point improvement on mortgage bonds. Investors have already updated the interest rates available to clients. Essentially, we got that rate cut – the infamous rate cut we’ve been waiting months on - today.  

What could go wrong? 

Next week we’ll get more inflation data. Both CPI and PPI will come in and tariff impacts are a concern, especially with consumer goods and auto parts. This morning Powell made a point of saying that Fed policy is “data-dependent” so if either report next week shows hot inflation numbers – this whole party could end abruptly. Essentially, if you have a strategy that is interest rate specific, you should look at this like a preview rather than long term trend and act quickly. 

 Let’s talk about what real estate strategies should be rate dependent. Purchasing real estate is not one of them, SPOILER ALERT. Refinancing real estate? Definitely a rate-dependent strategy and today would be an excellent day to take action. If you’re looking to sell real estate, today’s news is important to you because it will increase buyer activity. The news cycle is always on a delay here so the general public will slowly digest the news of rates improving. This is why we saw an increase in mortgage applications this week.

Applications jumped 11% week-over-week, with refinance applications jumping 23%. There’s my point, proven. 

The long-awaited shift. 

I’ve always explained a buyers’ market versus a sellers’ market as a hinge that tilts based on 6 months inventory. Less than 6 months’ worth of inventory for sale on the market? Sellers have the upper hand. More inventory? Buyers can start negotiating. Homes are now sitting at 4.5 months’ supply, a 15.7 percent year-over-year increase. This is about 20% more inventory nationwide than last May. Someone specific is going to win right now. 

The buyer who hasn’t been waiting for lower rates, who has been seriously shopping and looking to take advantage of this little buyer’s market window… is about to get rewarded with a lower rate too. They’re going to win on two fronts because they were ready when the opportunity was presented. I’m like a proud mom over here, I’m just so happy for them.