Each week, we provide a 30,000-foot view of mortgage rates and the broader economic forces shaping the housing market. Here’s what happened last week—and what we’re watching next.
Mortgage Rates at a Glance
- 30-year fixed mortgage rate: up 0.125% week over week since Monday, January 26
Market Summary
Markets spent last week digesting a potential shift in Federal Reserve leadership, ongoing internal debate at the Fed, mixed labor market signals, and inflation data that came in hotter than expected—but in a very narrow segment of the economy. Meanwhile, home prices continue to show resilience, supported by easing mortgage rates and limited housing supply.
What Happened Last Week
Potential Fed Leadership Shift
President Trump has announced plans to nominate former Federal Reserve Governor Kevin Warsh as the next Fed Chair. While Warsh has historically been viewed as an inflation hawk, his more recent commentary suggests greater openness to faster rate cuts—an important development markets are watching closely.
Federal Reserve Policy Update
The Fed held its short-term policy rate (not mortgage rates) steady at 3.50%–3.75%, following three previous rate cuts. Notably, the decision was split, with two officials favoring an additional 25-basis-point reduction. Changes in the Fed’s policy statement highlighted growing internal disagreement, particularly around risks to employment.
Rates Outlook
Markets currently expect the Fed to remain on hold over the next two meetings. However, upcoming economic data—especially labor market reports—could shift that outlook.
Home Prices Continue to Firm
- The Case-Shiller Home Price Index showed a modest monthly decline before seasonal adjustment but rose 0.4% seasonally adjusted and 1.4% year over year.
- The FHFA Home Price Index painted a stronger picture, with prices rising 0.6% month over month and 1.9% year over year, signaling continued momentum in mortgage-financed homes.
Labor Market Signals
Initial and continuing jobless claims edged lower but remain elevated. This suggests slower re-employment and evolving worker behavior. One key trend to watch is the number of individuals surpassing the typical 26-week cap on continuing jobless claims, which can vary by state.
Inflation Update
December’s Producer Price Index (PPI)—a favored inflation gauge for the Fed—came in hotter than expected. Importantly, the increases were concentrated in machinery and equipment margins, pointing to narrow but persistent inflation pressures rather than broad-based price acceleration.
Looking Ahead
This week brings a full slate of labor market data:
- Tuesday: Job Openings report
- Wednesday: ADP private payrolls
- Thursday: Weekly jobless claims
- Friday: The highly anticipated employment report, including nonfarm payrolls and the unemployment rate
As always, we’re monitoring the data closely and ready to help you navigate what it means for rates, housing, and your next move.
— Drew & Team
