Interest Rates and You, Where Are We Headed?

CPI came in this morning at 3%, marking a 0.5% rise in January. In response, the 10-year Treasury yield jumped to 4.651%, and the 2-year Treasury yield rose to 4.37%. With that, the Fed’s rate-cut plans have essentially hit pause, and most expect them to stay on hold for a while—likely pushing any rate cuts past summer. CPI (Consumer Price Index) measures inflation by tracking price changes in everyday goods and services. A rising CPI means higher living costs, which can influence interest rates and mortgage rates)

What does this mean for real estate?

Unless CPI drops quickly, mortgage rates are likely to hover in the mid 6% range for 7- and 10-year ARMs, while 30-year fixed rates could stay in the high 6% region.

Looking at the numbers, Santa Clara County’s average sales price for single-family homes in January 2025 landed just under $2.3M—a 16% jump from January 2023 and an 8.5% increase from January 2024. The big factor? There's still just plain more buyers than sellers out there right now. By a lot!

So, what’s next? I expect the coming months to mirror 2023—mortgage rates staying stagnant while home prices continue to creep up.

If you’re waiting to refinance, hang in there! Rates won’t stay this high forever. And if you’re house hunting, set realistic goals and work with a knowledgeable realtor. This market isn’t the place for casual browsing! And if you're a seller, congrats, you're gonna get a great price on your sale.