Wednesday's Scoop: Stumble☀️

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Here’s what you need to know today to inform your work, spending, and investments:

1. Policymakers think the economy is solid.

2. Mortgage rates have climbed in recent weeks.

3. Low affordability has stalled the housing market.

Unemployment Rate: 4.1%
^{Relatively low, but up from 50-year lows}

The US economy seems to be holding steady, according to the Federal Reserve. In its Beige Book report released Wednesday, the Fed said economic activity was "little changed" from September through early October, with only two of the twelve US regions reporting modest growth. On the bright side, hiring picked up a bit, and the cost of living isn’t rising much. While things aren't booming, the steady pace might keep layoffs low and everyday costs on an even keel for now.

30yr Mortgage Rate: 6.5%
^{That’s down from 7.9% a year ago. (MBA)}
Median Home Price: $404,500
^{That’s up from $393K a year ago. (Existing Homes, NAR)}

Expensive mortgage rates have slowed purchases and refinancing. The Mortgage Bankers Association reported that total mortgage application volume dropped to the lowest level since July last week, with the average 30-year fixed-rate mortgage remaining steady at 6.52%. Refinance applications fell 8% but are still 90% higher than the same week last year when rates were nearing 8%. Applications to purchase homes decreased by 5% for the week but are up 3% compared to a year ago. So even though borrowing costs are cheaper than last year, higher home prices and uncertainties like the upcoming presidential election are making buyers hesitant to jump into the market.

Low affordability has stalled the housing market. According to the National Association of Realtors, the number of existing homes sold in September fell 1% from August, hitting an annualized rate of 3.84 million units. That's 3.5% lower than the same time last year and marks the slowest sales pace in 14 years. Even though more homes are on the market—with inventory up 1.5% to 1.39 million—the supply is still tight, keeping home prices from falling much. The median home price fell slightly last month to $404,500, but that’s still 3% higher than last year. Expensive mortgage rates and rising home insurance costs make homes even less affordable. First-time buyers feel the squeeze, making up just 26% of sales, an all-time low, while cash buyers continue dominating the market.

The Market: ⬇️ -0.9%
S&P 500: 5,797.42
1Mo: +1% | 1Yr: +37% | 5Yr: +92%

The market sank on Wednesday as investors started worrying about the implications of borrowing costs staying higher for longer. Companies are reporting solid numbers, but sales are still slowing. The national debt keeps growing, and Washington doesn't seem to have any major plans to get it in check.