July Market Update

We are in the midst of the usual mid-summer lull in the market, marked by fewer showings, longer marketing times, and price reductions. Inventories peaked in June and have declined slightly in all of the Tri-Valley cities except Danville and Alamo, which saw slight increases this month. The average number of days on the market increased across the board by an average of five days. I expect these trends to continue through August and early September, when we usually see an increase in buyer activity and a decrease in inventory levels.

Interest rates have not changed significantly in either direction. The Fed is expected to cut the federal funds rate at this week’s meeting; however, this does not always correlate with lower mortgage rates. Mortgage rates increased by more than 1% following the Fed’s series of rate cuts totaling 1% in late 2024, indicating that the Fed has limited control over the Treasury market and mortgage rates, which are influenced by expectations for future economic activity, inflation, and other factors.

Rate expectations for the remainder of the year are varied and range from a low of 6.3% (Fannie Mae) to 6.9% on the high end (Wells Fargo economists). Most analysts expect rates to remain steady between these two figures throughout 2025, with a gradual decrease likely beginning in early 2026.

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