Buyer confidence down, interest rates unchanged
The Federal Reserve announced that it is maintaining its benchmark interest rate in the range of 4.25% to 4.5%. The July 30 decision marks the fifth consecutive time the Federal Open Market Committee has met and not made a rate change since January.
Fed Chair Jerome Powell acknowledged elevated uncertainty in the economic outlook, noting slowing growth and rising inflation.
Despite the hold, economists say it is highly likely that the Fed will make a downward adjustment to the rate soon. Markets now expect a rate cut at the next meeting in September or sooner, especially following the weak July jobs report.
In June, due to high interest rates and economic uncertainty, residential construction spending fell for the sixth straight month, hitting a 22-month low, with both single-family (-5.3%) and multifamily (-9.5%) housing down year over year. Private investment also sharply declined by 15.6% in the second quarter of the year, and the homeownership rate fell, according to a recent jobs report released by the Bureau of Labor Statistics.
While the overall economic picture shows signs of weakness, there was a slight improvement in consumer confidence in July, with the Consumer Price Index rising two points to 97.2. Consumers, however, remain concerned about tariffs pushing up prices. They also believe that mortgage, auto loan and credit card rates are more likely to rise, according to the July Consumer Confidence Index.
“High mortgage rates are killing off the American dream for the younger generations and a path toward financial wealth and financial security in their retirement years,” said Lawrence Yun, chief economist of the National Association of Realtors. “There are more renters and fewer homeowners than before.”
The anticipated interest rate cuts are a crucial policy response aimed at providing some support, particularly to the housing sector, as policymakers navigate the risks of slowing growth amidst concerns of potential upward pressure on prices from tariffs. A rate cut could aid the housing market, he said.
“Home sales closing and pending contracts have been moving sideways for a while, even as home prices have been notching higher and more inventory showing up in the market,” Yun said. “The temporary high inventory will quickly get soaked up once mortgage rates move toward the 6% mark.”
As of Aug. 8, a 30-year fixed-mortgage rate was 6.5% and an adjustable rate was 6.875%.
Read the Federal Reserve’s announcement.
More adult children moving back home, study shows
More generations are living together than ever before, according to a recent report from the National Association of Realtors.
The report reveals that multigenerational buying has reached an all-time high, with 17% of homes purchased last year for a household with more than one generation — such as adult siblings, adult children and grandparents.
What’s driving this trend? Economic necessity. Thirty-six percent of homebuyers cited “cost savings” as the primary reason for purchasing a multigenerational home — a significant increase from just 15% in 2015.
“The rise in multigenerational home buying underscores a broader trend driven by economic necessity and evolving family dynamics, as it offers a practical and supportive living arrangement that resonates with many families, particularly in times of economic uncertainty and changing social dynamics,” the report states.
According to the report, the number of adult children returning home has nearly doubled over the past decade. Adult children living with parents hit 21% in 2024, up from 11% in 2015. About 20% of these adult children never left home. They cited high living costs, student debt and job market difficulties as driving factors for living with their parents.
Gen Xers (ages 45-60) and younger baby boomers (ages 60-78) are more likely than other generations to include adult children who have returned home due to economic challenges. About a quarter (24%) of these Gen Xers and young baby boomers reported having three or more income-earners in their household.
Gen Xers also account for the highest percentage of those purchasing multigenerational properties. They represent about a quarter (21%) of all multigenerational homebuyers. At 12%, older millennials, ages 35-44, came in second.
Older millennials (35%), however, cited purchasing multigenerational properties to accommodate their aging parents.
Read the full report.
New report urges home insurance reforms
The Center for California Real Estate is urging California leaders to overhaul the state’s homeowners insurance regulatory framework and address growing climate risks, particularly wildfires, as part of a push to stabilize the insurance market, which is facing rising premiums, non-renewals and the withdrawal of major insurers.
“It’s time to move from fragmented efforts to coordinated and public-private sector solutions that can stabilize the market, protect homeowners and build long-term sustainability across the state,” according to the group’s recent report, which includes input from a panel of experts from academia, consumer advocacy, fire mitigation education and the building and insurance industries, representing California and national perspectives.
The report recommends solutions that center around themes involving modernizing the regulatory framework, scaling defensible space and home hardening programs, advancing data transparency and consistency, and advancing public engagement and education.
Streamlining rate approvals is among the group’s key recommendations. The report suggests changes around the pace and process of rate approvals. Panel experts noted that the state’s average time to approve rate filings is approximately 11 months, compared to the national average of 64 days. Fast-tracking this process will create greater predictability for private insurers, creating incentives to stay in the market or return to California, according to the report. Participants suggested automatic, incremental rate approvals,such as those used for water rate and property tax increases to streamline processing.
The report also recommends investing a whopping $20 billion to $25 billion over the next five years, and $2 billion annually thereafter, toward comprehensive mitigation efforts at the property level. Panel experts suggested a co-funding model including utility and insurance companies supporting “high-impact” mitigation zones.
Read the full report.
Silicon Valley Association of Realtors (SILVAR) is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
