Wealth Building Through Real Estate

## Mortgage Rates Edge Higher, Influencing Affordability

The average U.S. 30-year fixed mortgage rate climbed to 6.34% in early October, up from 6.30% the previous week, marking the second consecutive weekly increase after a period of declines that brought rates to their lowest level in nearly a year ([apnews.com](https://apnews.com/article/49de41ba42bdfe572be3b86caeeb1fcb?utm_source=openai)). This uptick follows the Federal Reserve’s first rate cut in a year (25 basis points in September) but highlights persistent investor caution and varying Fed rhetoric on the pace of future cuts ([apnews.com](https://apnews.com/article/49de41ba42bdfe572be3b86caeeb1fcb?utm_source=openai)). Meanwhile, 15-year fixed rates inched up to 5.55%, and adjustable-rate mortgage products saw similarly modest increases. Economists at Fannie Mae note that a sustained drop to around 5.5% on the 30-year product could be the tipping point needed to significantly boost home-buying activity, as current rates remain well above levels that historically spur strong transaction volumes ([barrons.com](https://www.barrons.com/articles/mortgage-rates-housing-market-sales-economy-fannie-mae-18f4dfe2?utm_source=openai)).

## August Pending Home Sales Show a Surprise Rebound

According to the National Association of Realtors’ Pending Home Sales Index (PHSI), contract signings rose 4.0% month-over-month in August, well above the 0.2% gain economists had forecast, and were up 3.8% from August 2024 ([reuters.com](https://www.reuters.com/business/us-pending-home-sales-rebound-august-amid-low-mortgage-rates-2025-09-29/?utm_source=openai)). The Midwest (+6.5%) and South (+4.8%) led gains, while the Northeast saw a modest decline. NAR’s Chief Economist Lawrence Yun attributed the rebound to mortgage rates dipping to an 11-month low following the Fed’s rate cut, which encouraged more buyers to lock in financing before rates could rise again ([globenewswire.com](https://www.globenewswire.com/news-release/2025/09/29/3157871/0/en/NAR-Pending-Home-Sales-Report-Shows-4-0-Increase-in-August.html?utm_source=openai)). However, Yun cautioned that cooling job gains—averaging only 29,000 per month in the three months to August versus 82,000 a year earlier—could temper further momentum in housing activity.

## Existing-Home Sales Stall, Inventory Remains Tight

The NAR’s Existing-Home Sales Report showed sales in August ticking down 0.2% from July to a seasonally adjusted annual rate (SAAR) of 4.0 million units, leaving sales essentially flat year-over-year and continuing one of the deepest slumps since the early 1990s ([nar.realtor](https://www.nar.realtor/newsroom/nar-existing-home-sales-report-shows-0-2-decrease-in-august?utm_source=openai)). Total unsold inventory fell 1.3% month-over-month to 1.53 million units, representing a 4.6-month supply at the current pace of sales, compared with a six-month supply considered balanced ([nar.realtor](https://www.nar.realtor/newsroom/nar-existing-home-sales-report-shows-0-2-decrease-in-august?utm_source=openai)). The tight supply backdrop continues to support home prices even as sales volumes struggle, underscoring the persistent mismatch between buyer demand and available listings.

## Home-Price Growth Moderates, Case-Shiller Shows Slowing Gains

July’s data from the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index revealed that home-price growth slowed to just 1.7% year-over-year, marking the sixth consecutive month of deceleration ([barrons.com](https://www.barrons.com/articles/home-price-gains-july-case-shiller-85da837e?utm_source=openai)). Among the 20 major metro areas, price gains averaged 1.8%, with New York (6.4%), Chicago (6.2%), and Cleveland (4.5%) outperforming, while markets such as Tampa and Miami saw outright declines. Despite moderating appreciation, the national median existing-home price in August stood at $422,600—a 2.0% increase from a year ago—demonstrating that aggregate price levels remain elevated by historical standards ([nar.realtor](https://www.nar.realtor/newsroom/nar-existing-home-sales-report-shows-0-2-decrease-in-august?utm_source=openai)).

## Luxury Segment Shows Early Cracks

Once‐resilient, the U.S. luxury housing market is beginning to falter amid broader economic uncertainty. During the three months ending August 31, sales of homes priced in the top 5% nationally fell 0.7% year-over-year—the weakest performance since tracking began in 2013—while the median luxury home price rose just 3.9%, down from 6.1% a year earlier ([wsj.com](https://www.wsj.com/real-estate/luxury-homes/luxury-housing-market-slowing-d3338a4b?utm_source=openai)). Inventory in the luxury tier surged 9.5% annually, reaching its highest level since 2020, as sellers in some markets acted out of concern over tariffs, stock market volatility and potential policy shifts. While pockets like Indianapolis saw double-digit sales growth, coastal markets such as Miami and Tampa grappled with inventory and weather-related headwinds, underscoring that high‐end real estate remains vulnerable to localized dynamics ([wsj.com](https://www.wsj.com/real-estate/luxury-homes/luxury-housing-market-slowing-d3338a4b?utm_source=openai)).

## Residential Real Estate’s Role in Long-Term Wealth Building

Despite short-term cycles in sales and rates, residential real estate continues to be a foundational component of household wealth accumulation. Over the past five years, U.S. home‐equity balances have surged by roughly 83%, reaching an estimated $35.1 trillion as of mid-2025, compared with a 38% rise in financial assets, according to J.P. Morgan Asset Management ([am.jpmorgan.com](https://am.jpmorgan.com/us/en/asset-management/institutional/insights/market-insights/market-updates/notes-on-the-week-ahead/the-investment-implications-of-the-wealth-surge/?utm_source=openai)). The average homeowner today holds more than $400,000 in home equity—nearly double the level from 2020. Moreover, homeowners benefit from leverage: equity gains accrue on the full value of the property, magnifying returns when financed with a mortgage. Entering 2025, tappable equity—home-equity that can be accessed through home-equity lines or cash-out refinancing while maintaining a 20% ownership stake—totaled about $11 trillion, averaging $203,000 per mortgage-holding household and providing potential liquidity for education, retirement or reinvestment ([bankrate.com](https://www.bankrate.com/home-equity/home-equity-and-building-generational-wealth/?utm_source=openai)). For long-term investors, homeownership offers not only shelter but also a historically resilient, inflation-hedged asset that can generate substantial wealth over decades when combined with prudent leverage and market timing.

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*All data referenced covers the week of September 29 to October 5, 2025.*