This morning, Redfin published an article prognosticating a tremendous improvement in home affordability next year. They see a 3% increase in home sales and a “normalization of prices”, with home prices increasing an average of 1% during 2026. They are also expecting personal incomes to outpace home price increases, which hasn’t happened since 2012. Redfin sees mortgage interest rates improving 0.3% from the 2025 average, with the Fed cutting as well.
And rental prices have been declining over the last 2 1/2 years and this month they dropped 1.1% compared with 12 months ago. That sucks for landlords, but it will help bring the inflation calculations down. And lower inflation means lower interest rates. Also helping inflation is oil prices and the price of gas in particular. AAA reported the gas is currently at $2.99 a gallon which is the lowest since May 2001.
The all-important PCE report will be published later this week, but not before the ADP report due tomorrow.
The 10 Year is still above 4.0% at 4.09%.
