The final week of August brought another reminder that the housing market remains closely tied to inflation, Federal Reserve policy and the bond market. The U.S. economy continues to show resilience, but stubborn inflation and renewed geopolitical concerns are keeping interest rates elevated and creating a market where buyers have more negotiating power while well-positioned sellers can still achieve excellent results.
Stock Market & The Dow
Wall Street finished Friday, August 28, modestly lower after Federal Reserve Chair Kevin Warsh reinforced the Fed's commitment to bringing inflation back toward its 2% target.
The Dow Jones Industrial Average closed at 53,559.99, down just 0.02% Friday. The S&P 500 closed at 7,711.76, down 0.25%, while the Nasdaq Composite finished at 26,402.42, falling 0.52%.
Despite Friday's decline, all three major indexes posted gains for the week: the Dow gained approximately 0.53%, the S&P 500 gained 0.49%, and the Nasdaq rose 0.85%. Investors continue to balance strong corporate earnings, particularly within the technology and artificial-intelligence sectors, against concerns that interest rates may remain higher for longer.
Inflation Remains the Key Issue
Inflation continues to be the most important economic factor influencing interest rates and housing.
The Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures Price Index, rose 3.7% year-over-year in July, unchanged from June. Core PCE inflation, which excludes food and energy, remained at 3.3%.
Both readings remain well above the Federal Reserve's long-term 2% inflation target.
Federal Reserve Chair Kevin Warsh indicated at Jackson Hole that the central bank could still have additional work to do if inflation does not show convincing progress toward 2%. Following his comments, expectations for a possible September rate increase rose considerably, pushing short-term Treasury yields higher.
For housing, this matters tremendously because mortgage rates generally respond more directly to Treasury yields and inflation expectations than to the Federal Funds Rate itself.
Job Market Remains Resilient
The labor market continues to demonstrate surprising strength. Initial unemployment claims for the week ending August 22 were 203,000, down 4,000 from the prior week.
A stable employment market is positive for housing because buyers are far more comfortable purchasing homes when they feel secure about their income and employment.
However, the Federal Reserve faces a balancing act. A strong labor market gives policymakers additional room to maintain—or potentially increase—interest rates while addressing inflation.
The upcoming August employment report will therefore be particularly important for mortgage rates and financial markets.
Mortgage Rates
According to Freddie Mac, the average 30-year fixed mortgage rate was 6.66% as of August 27, essentially unchanged from 6.65% the previous week.
The average 15-year fixed mortgage rate was 5.98%, compared with 5.95% one week earlier.
Rates have remained remarkably persistent in the mid-to-upper 6% range.
Mortgage Rate Forecast
The near-term outlook has become somewhat more challenging following the latest inflation numbers and the Fed's Jackson Hole commentary.
Mortgage rates could remain approximately within the 6.5%–7% range during the coming months, with considerable day-to-day volatility. A meaningful drop toward 6% will probably require convincing evidence that inflation is declining and Treasury yields are moving lower.
Conversely, continued inflation pressure—or an additional Federal Reserve rate increase—could keep mortgage rates near current levels or temporarily push them higher.
That does not mean buyers should necessarily wait. National Association of REALTORS® Chief Economist Lawrence Yun recently noted that the housing market would likely be considerably stronger if mortgage rates returned closer to 6%.
Waiting for rates can therefore create its own risk: if rates eventually decline significantly, additional buyers could re-enter the market simultaneously, increasing competition and potentially pushing home prices higher.
U.S. Housing Market
National housing activity remains restrained by affordability.
Existing-home sales declined 1.7% in July to an annualized rate of approximately 4.06 million homes, although sales were still 0.7% higher than a year earlier.
The national median existing-home price reached approximately $434,100, roughly 2% higher year-over-year, while available inventory stood at approximately 1.54 million homes, representing a 4.6-month supply.
Meanwhile, new-home sales dropped sharply in July. Sales of newly constructed single-family homes fell 10.5%, illustrating just how sensitive buyers remain to mortgage rates and affordability.
The result is a much more balanced housing environment than the extreme seller's market experienced several years ago.
Westlake Village Housing Market
Westlake Village remains highly desirable, although statistics can fluctuate substantially from month to month because the community has a relatively small number of transactions and a wide range of luxury properties.
The latest available Redfin data places the median sale price at approximately $1.79 million, up approximately 31.4% year-over-year for the period reported.
That large percentage increase should be interpreted cautiously because a handful of higher-end luxury transactions can significantly move Westlake Village's median price.
For sellers, properly priced homes in desirable neighborhoods continue to attract buyers. However, buyers at today's mortgage rates are considerably more price-sensitive, making realistic pricing, presentation and sophisticated marketing increasingly important.
Thousand Oaks Housing Market
Thousand Oaks continues to show a healthier balance between buyers and sellers.
The latest available data shows a median sale price of approximately $1.106 million, about 2.1% below the same period last year. Homes are taking approximately 40 days to sell, while transaction volume has increased from year-ago levels.
That combination is important.
More transactions alongside relatively stable prices suggests that buyers remain interested in the Conejo Valley but are becoming more selective.
Move-in-ready homes that are properly positioned can still command strong interest, while properties priced significantly above comparable sales may require reductions or longer marketing periods.
Los Angeles Housing Market
Los Angeles is experiencing a similar normalization.
The latest available data places the median home sale price around $1.069 million, essentially unchanged from a year earlier. Homes are selling in approximately 48 days, compared with 46 days last year, while transaction volume has increased modestly.
Rather than experiencing a dramatic collapse in pricing, Los Angeles is increasingly becoming a property-by-property market.
Location, condition, insurance costs, renovation requirements, school districts, views and neighborhood inventory can create dramatically different outcomes even within the same ZIP code.
World Events & Their Effect on Housing
Global events remain an important wildcard.
Escalating geopolitical tensions involving Iran and the broader Middle East have contributed to volatility in energy markets. Oil and gasoline prices feed directly into inflation expectations, and higher inflation can lead investors to demand higher Treasury yields.
At the same time, continuing international trade and tariff uncertainty can increase the cost of imported materials and consumer goods. Those pressures can affect both inflation and construction costs.
For housing, the chain reaction is straightforward:
Geopolitical uncertainty → energy and commodity volatility → inflation concerns → higher Treasury yields → higher mortgage rates → reduced purchasing power.
Conversely, major global uncertainty can sometimes create demand for U.S. Treasury securities. If Treasury yields fall as investors seek safety, mortgage rates can occasionally benefit.
This is why mortgage rates can change quickly even when the Federal Reserve itself has not changed interest rates.
What This Means for Home Buyers
Today's buyer has something buyers lacked several years ago: negotiating power.
There are more opportunities to negotiate purchase price, seller credits, repairs and potentially mortgage-rate buydowns. Buyers may also have additional time to complete inspections and conduct proper due diligence rather than making rushed decisions simply to beat competing offers.
Buyers should concentrate primarily on purchasing the right home at the right price rather than attempting to perfectly time mortgage rates.
A mortgage can potentially be refinanced later. The purchase price cannot.
What This Means for Home Sellers
For sellers, this remains a viable market—but strategy matters considerably more.
The days when virtually any property could be listed at an ambitious price and immediately receive multiple offers have largely passed.
Today's buyers are extremely informed. They can instantly compare your home with active listings, pending properties, recent sales and price reductions.
Homes that are properly priced, beautifully presented and aggressively marketed can still generate strong activity.
Homes that begin significantly overpriced often accumulate days on market, eventually requiring price reductions and giving buyers additional negotiating leverage.
The Bottom Line
The housing market entering September 2026 is neither a traditional buyer's market nor the extraordinary seller's market experienced earlier this decade.
It is a strategic market.
Mortgage rates remain elevated near 6.66%, inflation remains above the Federal Reserve's target, and geopolitical uncertainty continues to influence energy markets and Treasury yields. At the same time, employment remains resilient, buyers are gaining choices, and desirable Southern California communities continue to benefit from constrained long-term housing supply.
For buyers, opportunities are emerging.
For sellers, preparation, pricing and marketing are more important than ever.
Thinking About Buying or Selling?
Every property—and every financial situation—is different. Whether you are considering selling your home, purchasing your next property, relocating, investing or simply wondering what your home may be worth in today's market, having an informed strategy before making a move can make a significant financial difference.
Let's discuss the numbers, current inventory and opportunities specific to your neighborhood and your goals. Contact me today for a confidential real estate consultation and personalized market analysis.
Have a great weekend!
Tina Lucarelli - Realtor - DRE 02012354
