This is the latest in a series of videos with Windermere Principal Economist Jeff Tucker where he delivers the key economic numbers to follow to keep you well-informed about what’s going on in the real estate market.

Hi. I’m Jeff Tucker, the principal economist at Windermere Real Estate, and these are the numbers to know right now.

2.4%

That’s the annual CPI inflation rate in September, meaning how much the Consumer Price Index climbed from one year ago. This was a step down from 2.5% in August, but it didn’t drop as much as the consensus forecast, which was expecting 2.3%.

Another data point here in red is the implied annual rate of inflation based on the monthly change: 2.2%. You can see that’s been more volatile, including some overheating back in Q1, but in general it’s been cool enough to bring annual inflation down.

Inflation has had a long, rocky path downward since it peaked at 9.1% in summer 2022. This is another step in the right direction, but still a little concerning that it’s not dropping faster.

Combined with the strong September jobs report I discussed last week, that means the Fed might be having second thoughts about how quickly they need to cut the Federal Funds Rate, especially after they started it off with a bang by cutting half a point in September.

Now there’s even some discussion of the Fed pausing on rate cuts at their next meeting in November.

In the meantime, the combination of renewed labor market strength and a slower cooldown in inflation, is enough to push up long-term yields, like mortgage rates, which brings me to the other number to know right now:

6.64%

That’s where the 30-year mortgage rate stood on Friday October 11th, according to Mortgage News Daily. It’s up about half a point from where it stood one month ago, although it’s still down about 1 full point from where it was at this time last year.

Looking ahead, for mortgage rates to resume falling, we probably need either some reassuring data showing inflation cooling down, or, would need to see more signs of labor market deterioration. Or both!

Interest rates went up so much because the economy was running hot, arguably overheating, for a couple of years, so now markets need to see more convincing evidence of a cooldown to get us out of that high-rate environment.

In the waning days of summer, the local real estate market saw rising sold prices, declining mortgage rates and rising inventory. The price trend shows that sellers are still seeing gains by listing their homes. The rate and supply trends are motivating buyers to be active in the market this fall.

As of the second week of September, mortgage rates were at their lowest level in 19 months, sitting at 6.2% for a 30-year fixed-rate loan. With at least one rate cut coming from the Federal Reserve this fall, buyers and investors are feeling bullish. It will be interesting to see how our region’s supply of homes – which is significantly higher than at this time last year – gets absorbed in the coming months by rate-motivated buyers.

Last month the median sold price of a King County single-family home sold price rose 5.4% year over year, up to $955,000 from $906,250 in August 2023. The monthly trend was more encouraging to home buyers, however, as August’s median sold price dipped 4.4% from July’s $999,000. Also good for buyers: the number of single-family home listings at the end of August was 29% higher than it was a year ago. King County condo prices stayed static year-over-year at $525,000, despite a 69% jump in available supply.

Seattle saw a 3.4% year-over-year increase in single-family home prices, up to $930,000 from $899,000 in August 2023. This represented a 4.4% monthly price drop from July’s median of $972,500. At the end of August, Seattle’s supply of single-family home listings was up 34% from the previous year, which is great news for buyers, but down 8% from July levels, which could benefit sellers. Seattle condo prices dropped 3.5% year over year, from $575,000 to $555,000, a more typical response to rising inventory, which was 39% higher than a year ago.

On the Eastside, the median sold price of a single-family home was $1,550,000 in August, up 6.7% year-over-year and down 4.3% from July. Pending sales dropped 16% from July, while inventory remained relatively flat between July and August. Eastside condo prices rose 2.3% year over year to $614,000, which was down 2.2% from July’s median of $627,500. At the end of August, the supply of listed condos was up 119% from the previous year and 18% from the end of July. Eastside buyers may be giving single-family homes another look as interest rates decline.

The Snohomish County market was quite active in August, with pending unit sales of single-family homes up 8% from July and 18% from the previous year. Median sold prices were up 6.8% year over year – to $780,000 from $730,563 in August 2023 – but down 4.7% from July’s median of $818,419. This month-over-month price dip occurred even in the face of continued low supply, at 1.2 months of inventory. Snohomish County condos saw August price gains, with the $589,975 median sold price up 24.2% from a year ago and 5.4% from July, despite inventory levels that were 76% higher than a year ago.

As fall begins, our local real estate market has positive markers, strong activity and relative balance. With hopes for further interest rate drops in the coming months, there should be opportunity ahead for both buyers and sellers.

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