After the Fed lowered rates by 25 basis points this week, mortgage rates jumped almost the same amount, continuing the trend of the lowest rates of the cycle directly preceding the Federal Reserve Open Market Committee meeting. To borrow a phrase from Alan Greenspan, I'd call the hopes of lower rates irrational exuberance. While most people understand that the Fed's overnight rate does not directly tie to mortgage interest rates, which more closely follow the 10-year Treasury Bond, there appears to be some misplaced anticipation that a decrease in the overnight rate will reduce mortgage rates. Without getting into the temperament of bond investors, demand for higher yields has derailed the highly anticipated decline in mortgage interest rates. Everything should settle out over the coming weeks, especially in light of Jerome Powell's comments after the meeting that another rate decrease in December is all but off the table. While lower Fed overnight rates may eventually trickle down to mortgage interest rates, there are no straight lines in economics.
Deschutes County single-family listings between $1 million and $1,999,999 decreased by 18 this week to 301. Twelve pending sales are up by two from last week, averaging $1,301,900, and 7 of those had list prices reduced by an average of 3.28% before securing a buyer. Eighteen closed transactions nearly double last week's ten, averaging $1,392,942, with an average price decrease before securing a contract of 9.72%. The sold-to-original list price ratio this week was 91.79%.
Listings between $2 million and $2,999,999 in Deschutes County decreased by 2, to 80. One pending sale at $2,250,000 occurred on Swalley Road in Tumalo. Two closed transactions occurred, one on Cloverdale Road in Sisters for $2,150,000, initially listed for $2,350,000, and the other on Columbia Street in Bend for $2,700,000, initially listed for $3,295,000. Both closed transactions show how much sellers are willing to negotiate to make sales happen this fall.
The inventory in Deschutes County over $3 million this week is flat at 45, with no pending or closed transactions.
Listings over $1 million in Crook County decreased by one this week to 60. There were no pending sales, with one closed transaction at $1,700,000 on Prospect Court in Brasada Ranch. The closed transaction initially listed for $1,895,000.
Deschutes County farm listings over $1 million decreased by one to 15, with no pending or closed transactions. Crook County farm listings over $1 million are flat at 10, with no pending or closed transactions.
With Jerome Powell stating that another rate decrease from the Fed this year is highly unlikely, we should return to a period of stability with the next Fed meeting not taking place until late January 2026. The national average for a 30-year fixed-rate Jumbo mortgage is 6.3%, up from recent lows. I anticipate Jumbo rates decreasing slightly as markets digest the Fed's latest move and bond investors adjust to current economic conditions. It is still likely that mortgage interest rates will be in the high 5% range by spring of 2026, but rates in the low 5% range seem unlikely. One positive of slightly higher interest rates is increased inventory, which creates competition between sellers. As we have witnessed this fall, buyers are negotiating prices double-digit percentage points below initial list prices, which in many cases is a bigger financial benefit than a slightly lower interest rate.
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