Prices have flat lined in Sarasota County. In October, the median sold price of existing single family homes was $436,000. The average for the past 6 months was $428,000. What will it take to increase prices? Lower mortgage rates.

Despite the Fed’s recent ¾% cut in the Fed Funds Rate, mortgage rates remain elevated, 6.8% of even date hereof. The reason? Although inflation has retreated, the economy continues to expand rather than contract. The CPI is currently 2.6%. An expanding economy brings higher rates. A contracting economy, lower rates.

Mortgage rates will not go lower until jobless claims and the unemployment rate goes higher. When that occurs, and macroeconomic trends are currently breaking that way, then regardless of Fed action, the yield on the 10-year Treasury will break below 3.7%, mortgage rates will fall to the mid to high 5% range. Prices and sales will go up.

As to the effect of President Trump’s election on the economy, economists disagree on whether tariffs will stoke inflation. I think not. First, as to the existing home market, the effect of tariffs on prices is minimal. Existing home sales are a supply and demand driven market. It is new home prices which rise from the increased cost that tariffs impose on raw materials, their manufacture and delivery. Second, if the President Elect is successful in releasing the chains of the “Administrative State,” it will mute the inflationary costs of tariffs.

A balanced market, such as we have, is a good market. It is good for buyers and sellers. As we approach the new year, the data is trending in a positive direction, a measured and slow walk to higher prices and sales.