Fed Holds Interest Rates Steady as Mortgage Rates Remain Above 7% and Housing Market Cools

The Federal Reserve has decided to hold interest rates steady, but that doesn't mean borrowing costs are coming down just yet. Mortgage rates remain elevated, homebuilder confidence has fallen to its lowest level in 14 years, and economic uncertainty continues to weigh on buyers and sellers. While the labor market remains relatively stable, the latest housing data shows that affordability challenges are slowing activity across Southern California. Here's what the latest economic and real estate reports mean for the market.

Federal Reserve Keeps Interest Rates Unchanged

At its October 28 meeting, the Federal Reserve voted to keep its benchmark federal funds rate unchanged at a range of 3.75% to 4.00%. The Fed cited continued economic growth and a relatively stable labor market, while acknowledging that inflation remains elevated.

The decision was not unanimous, with two members favoring a quarter-point rate increase. The Fed indicated it will continue monitoring inflation and employment data before making future policy decisions.

Mortgage Rates Edge Lower, but Remain Elevated

There was some modest relief for homebuyers this week. According to Freddie Mac, the average 30-year fixed mortgage rate declined to 7.24% as of October 29, down from 7.32% the previous week. However, rates remain noticeably higher than a year ago, when the 30-year fixed rate averaged 6.17%.

Although this week's decline provides a little additional purchasing power, mortgage rates above 7% continue to affect affordability and monthly payments. Buyers should compare loan options and speak with a lender about their individual financing scenarios.

Builder Confidence Falls to a 14-Year Low

Builder confidence dropped three points in October to 29, its lowest reading since June 2012. Higher mortgage rates, expensive building materials, and weaker buyer demand continue to weigh on the industry. To attract buyers, 43% of builders reduced home prices in October, while 65% offered incentives such as mortgage rate buydowns and closing cost assistance.

Los Angeles and Orange County Housing Market Update

The latest September housing data shows that Southern California's market is experiencing slower sales, although home prices have remained relatively resilient.

The Los Angeles metro area reported a September median existing single-family home price of approximately $855,000, up 3.0% from a year earlier. Sales were down 8.0% year over year. The region had approximately four months of housing inventory, with homes taking a median of 33 days to sell.

Orange County continued to show stronger price performance, with the September median single-family home price reaching approximately $1.48 million, up 5.6% from a year earlier. Sales were down about 2% year over year, while inventory remained relatively tight at approximately three months of supply. Homes took a median of 30 days to sell.

These numbers show two markets where buyers are becoming more selective, but limited inventory is continuing to provide support for home prices. The slowdown in sales does not necessarily mean home values are declining; pricing can vary considerably by neighborhood, property condition, and price range.

What This Means for Los Angeles, Orange County, and Long Beach Buyers and Sellers

For buyers, the combination of elevated mortgage rates and slower sales activity may create opportunities to negotiate, particularly on properties that have been sitting on the market. Some sellers may be more willing to consider closing cost credits, repairs, or other concessions.

For sellers, realistic pricing and strong presentation are increasingly important. Buyers are paying close attention to monthly payments and comparing their options before making offers. Homes priced appropriately for current market conditions can still attract serious interest.

In neighborhoods throughout Southern California, local inventory, property condition, and comparable recent sales remain essential when determining the right pricing and marketing strategy.

As we move toward the end of 2026, buyers may find more room to negotiate, while sellers will need to be realistic about pricing and market conditions. Whether you're considering buying, selling, or simply keeping an eye on your home's value, understanding what's happening in your local market is more important than ever.

Hope everyone has a Happy Halloween!

Tim Majka