A quick note from us
We are seeing mortgage rates reach their highest levels in over two years, influenced by persistent global inflation and increased bond yields. This environment is creating headwinds for homebuyers, as sales of previously owned homes slipped 2% in August to the lowest level since June 2025. Inventory remains constrained nationally, with only a 4.9-month supply, intensifying competition in the Los Angeles market. Additionally, purchase applications declined 1% last week and are down 11% year-over-year, signaling caution among buyers. Adjustable-rate mortgages are gaining traction, now comprising nearly 10% of applications, as buyers seek relief from high fixed rates. The market is navigating volatility amid geopolitical tensions and economic uncertainty, requiring careful strategy for both buyers and sellers.
What this means for buyers: Buyers should prepare for higher borrowing costs and limited inventory, making it essential to act decisively and consider adjustable-rate options to improve affordability.
What this means for sellers: Sellers may face slower activity due to reduced buyer demand but can benefit from limited inventory, which helps maintain pricing power in the Los Angeles area.
Mortgage Rates and Global Inflation Dynamics
Mortgage rates have climbed due to rising long-term bond yields worldwide. Elevated inflation, driven in part by higher oil prices linked to the Middle East conflict, is pushing investors to demand higher returns. Governments issuing more debt to cover large deficits and increased corporate bond yields from AI investments further contribute to upward pressure on rates.
What this means for buyers: Expect borrowing costs to remain elevated as global factors sustain pressure on mortgage rates, affecting monthly payments and purchasing power.
What this means for sellers: Higher rates may temper buyer enthusiasm, but sellers can leverage the current market conditions to negotiate favorable terms.
Housing Market Activity and Inventory Constraints
Sales of previously owned homes in August declined 2% from July, marking the lowest level since June 2025. Inventory remains tight with a 4.9-month supply nationally, below the balanced market benchmark of six months. Home builder sentiment has also dropped to its lowest point in a year, reflecting ongoing challenges in the housing sector.
What this means for buyers: Limited inventory means competition remains stiff, requiring readiness and flexibility to secure a home in Los Angeles.
What this means for sellers: Sellers benefit from constrained supply, which supports home values despite slower sales volume.
Loan Origination Trends and Adjustable-Rate Mortgages
Higher mortgage rates have negatively impacted overall loan origination activity. Refinance applications dropped 3% last week and are down 62% from a year ago, reaching the lowest level since February 2025. Purchase applications fell 1% last week and are 11% lower year-over-year. Demand for adjustable-rate mortgages has increased, now nearly 10% of total applications, the highest in almost a year.
What this means for buyers: Adjustable-rate mortgages may offer a more affordable alternative in the current rate environment, worth considering for qualified buyers.
What this means for sellers: Slower loan origination could extend time on market, making pricing and marketing strategies critical to attract qualified buyers.
Market Outlook and Upcoming Economic Indicators
Investors remain focused on the Middle East conflict, oil prices, and Federal Reserve officials' comments regarding monetary policy. Key economic reports due this week include Personal Income and the Core PCE price index on Wednesday, the ISM manufacturing index on Thursday, and the Employment report on Friday. These data points will influence market sentiment and mortgage rate volatility.
What this means for buyers: Stay informed on economic developments as they can impact mortgage rates and home affordability in the near term.
What this means for sellers: Market conditions may shift quickly; maintaining flexibility and responsiveness will be essential to capitalize on opportunities.
Weekly Market Summary
Last week, the 10-year Treasury yield rose by 0.20 points, the Dow fell by 100 points, and the NASDAQ gained 500 points. These movements reflect mixed investor sentiment amid economic uncertainty and geopolitical tensions.
Closing Remarks
Every buyer and seller enters the market with different priorities. For some, it is achieving the strongest possible price. For others, it is timing, certainty, or aligning the sale of one property with the purchase of another. In a market where mortgage rates are adjusting, inflation remains elevated, and new construction is increasing competition, strategy matters more than ever. The way a property is priced, negotiated, and managed from contract to closing can directly influence both your financial outcome and your timeline. The difference between a disciplined plan and a reactive one can equate to tens, and in some cases hundreds, of thousands of dollars. If you would like clarity on your home's value in today's rate environment, or a thoughtful plan for what you can confidently purchase as conditions evolve, we would welcome the conversation.
