This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Interest rates remained flat from January 23rd to January 29th. The Federal Reserve held interest rates steady Wednesday as expected, but two governors dissented, preferring a quarter-point cut. It’s the first time since July that the central bank has chosen to pause its rate-cutting cycle, having lowered rates three times last year as it monitored the economic effects of President Donald Trump’s aggressive policies.
“Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization,” the central bank said in its post-meeting statement. “Inflation remains somewhat elevated.”
Money markets a re-signaling that rates could fall to 3.5% by April 2026, with around an 80% chance of a cut to 3.25% by November. Economists at Capital Economics forecast interest rates will be cut from 3.75% to 3% in 2026.
Maintaining awareness of geopolitical and macroeconomic factors is essential, as these can subtly shift rate expectations and lending activity in upcoming weeks.
Fed Watch: Target rate (in bps) possibilities, according to the CMEGroup (as of 01/29/2026 – 12:00 PM EST):
Home Values Show Tepid Growth as South and West Continue To Lag:
FHFA House Price Index (HPI) Monthly Report Data through November 2025:
Redfin’s Most Neighborly Cities of 2026: Salt Lake City, Portland and Kansas City Top the List
Piddling Population:
For the year ending 6/30/25 (2025), the US population grew 1.8 million, or 0.53%, down from 1% in 2024, the slowest population growth since 0.2% in 2021. The major cause; the drop in net immigration from 2.7 million in 2024 to1.3 million in 2025. During the Great Depression, growth was 0.6%/year, and in the decade preceding Covid it was 0.7%/year. Growth is expected to slow further in 2026. - Elliot Eisenberg, Economist
· Fed rate decision January 2026: Holds key rate steady
· Home Values Show Tepid Growth as South and West Continue to Lag
· Current versus Pre-Pandemic Long Run Inflation Expectations
· New Listings Rise For First Time in 2 Months As Lower Mortgage Rates Perk Up Homebuyers
· Early 2026 housing market gains traction as buyer demand returns
· The California State of Real Estate - Realtor.com Economic Research
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
Interest rate and annual percentage rate (APR) are based on current market conditions as of 01/29/2026, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 01/29/2026 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.