Federal Reserve Chair Jerome Powell loves to remind everyone the Fed is “data dependent.” And lately, the data has been loud and clear: inflation is cooling and the job market is slowing down. That combination explains why the Fed’s December rate cut made sense — but markets are still cautious about whether another cut will happen at the next Fed meeting on January 28.
For homebuyers and homeowners in Bellevue, Mountlake Terrace, and Mill Creek, this matters because Fed decisions influence borrowing costs across the economy — and over time, that can impact mortgage rates, affordability, and buyer confidence.
Let’s walk through the biggest updates and what they could mean for the local housing market.
The Fed reduced the Fed Funds Rate again in December, bringing the policy range down to 3.50%–3.75%. Based on futures market expectations, investors currently believe there’s about a 73% chance the Fed holds steady at the January 28 meeting, and only a 27% chance of another 0.25% cut.
Looking ahead to March 18, expectations are mixed:
47% probability rates are 0.25% lower than today
43% probability rates stay unchanged
Bottom line: the Fed may be done cutting for now — but that could change quickly depending on jobs and inflation.
For buyers in Bellevue (where affordability can be tight), and first-time buyers in Mountlake Terrace and Mill Creek, any shift in interest rates can make a meaningful difference in monthly payments.
The delayed government reports gave us both October and November job data, and overall it suggests the job market has lost momentum.
Key points:
October payrolls fell by 108,000
November gained only 64,000 jobs
Previous job totals were revised down by 59,000
The unemployment rate also climbed:
U-3 unemployment rose from 4.4% to 4.6%
U-6 unemployment (broader measure including underemployed workers) increased from 8.0% to 8.7%, the highest level since 2017 when excluding COVID impacts
One of the biggest concerns? The mix of job types:
Full-time jobs dropped by 983,000
Part-time jobs rose by about 1,000,000
That suggests more people are relying on part-time work — and that’s not exactly the type of trend that screams “economic strength.”
Powell also hinted these job gains may be overstated by around 60,000 jobs per month, meaning the true job growth could be much weaker than it appears.
Bottom line: weaker employment data puts pressure on the Fed to cut rates further — which could eventually support lower mortgage rates.
Inflation readings for October and November came in much cooler than expected.
Both headline and core CPI rose just 0.2% over the past two months, bringing annual inflation down to:
2.7% year-over-year for headline CPI
2.6% year-over-year for core CPI
That’s the slowest pace of core inflation growth since April 2021.
This matters because inflation is the main thing that usually prevents the Fed from cutting rates. When inflation cools, the Fed has more flexibility to ease monetary policy.
Even better: shelter costs — which have huge weight in CPI — barely moved:
Shelter makes up 35% of headline CPI
Shelter makes up 44% of core CPI
Shelter costs rose only 0.2% over the past two months
Annual shelter inflation dropped to 3.0%
If you annualize the last three months of CPI growth, inflation is running at about:
2.0% for headline
1.7% for core
Since the Fed’s preferred inflation measure (core PCE) usually runs lower than CPI, this suggests inflation may already be near or below the Fed’s 2% target.
Bottom line: cooling inflation supports the case for mortgage rate relief ahead — which is big news for buyers in Mill Creek, Mountlake Terrace, and Bellevue.
Builder confidence rose slightly, with the NAHB Housing Market Index moving up to 39. That’s higher than expected — but still below the key 50 line that signals growth.
Builders are still offering incentives:
67% of builders reported offering sales incentives — the highest level since COVID
That tells us affordability and buyer hesitancy are still major issues.
In markets like Mill Creek and Mountlake Terrace, where new construction communities can play a big role in inventory, incentives could become more common as builders try to keep momentum. In Bellevue, where new construction is usually more expensive, builder incentives can help offset monthly cost concerns for qualified buyers.
If you were a Fed policymaker looking for a reason to cut rates, this was a strong week: unemployment is rising and inflation is falling. However, global bond yields have been rising, which has kept the U.S. 10-year Treasury yield higher than it would normally be — and mortgage rates often follow that yield.
Even so, average 30-year mortgage rates have been staying below 6.25%, and the spring housing season isn’t far away.
For buyers in Bellevue, Mountlake Terrace, and Mill Creek, that means mortgage conditions are improving slowly — but they’re still influenced by broader market forces beyond just Fed decisions.
There’s also a big change happening in the background: Google has begun showing home listing data directly in some search results. That means homebuyers can potentially see listings without going through platforms like Zillow first.
If that expands, it could change how buyers find homes — especially in competitive markets like Bellevue and Seattle’s eastside areas.
Here’s the local takeaway:
Inflation is easing faster than expected
The job market is softening
The Fed has already cut rates and may cut again in 2026
Builder incentives are rising
Mortgage rates could gradually improve — but remain sensitive to bond markets
If you’re planning to buy a home in Mountlake Terrace, upgrade in Mill Creek, or make a move in Bellevue, this is a strong time to get prepared. Conditions are slowly shifting toward better affordability, and being ready early gives you more control when the next rate dip arrives.
At Home Right Lending, we’re a mortgage brokerage — not a lender — which means we shop multiple lenders to find the loan that fits your situation. Whether you’re buying your first home, refinancing, or navigating complex income, we’ll help you understand your options and move forward confidently.
If you're looking in Bellevue, Mountlake Terrace, or Mill Creek, contact us today to get pre-approved and position yourself for the next opportunity.