The Federal Reserve cut interest rates, and as an indirect result, mortgage rates crept closer to 6% – making it a great time for sellers to list their properties as the market became more attainable for buyers who were waiting to transact until rates dropped.
In September, the central bank approved a fifty-basis point rate reduction, marking its first decrease since the pandemic, and the largest single rate cut in 16 years. The Federal Reserve’s decision to reduce rates by 50 basis points was widely anticipated by analysts and has begun to impact the housing market. According to The New York Post, the average rate on a 30-year mortgage recently fell to 6.09%, down from 6.20%, marking the lowest level since early February 2023.
Sam Khater, Freddie Mac’s chief economist, explained, “While mortgage rates do not directly follow moves by the Federal Reserve, this first cut in over four years will have an impact on the housing market.”
Lawrence Yun, chief economist of the National Association of Realtors, commented that this reduction is likely the first of many rate cuts extending into 2025. Yun explained that although the Federal Reserve does not directly control mortgage rates, this move, paired with cooling inflation and slower job gains, has led to mortgage rates falling significantly.
He noted that purchasing power for homebuyers has risen by about $50,000 for those with a $2,000 monthly mortgage payment budget, giving previously priced-out buyers a new opportunity to re-enter the market. Mike Fratantoni, chief economist of the Mortgage Bankers Association, also noted that lower mortgage rates could bolster a stronger-than-typical fall housing market.
As the fall market is in full swing, we’re looking at almost a 10% increase in inventory for buyers, according to UrbanDigs. Despite added inventory, competition will still be high for those who waited for attainable financing because there is so much pent-up demand.
Sellers who price properly will see their properties sell faster, and for top dollar – in potential bidding scenarios – thanks to improved rates and increased competition.
However, sellers who price too high to test the market may be slow to get bites, as the buyer pool is still mulling over whether to take advantage of rate drops or continue to wait until next spring.
Economists project that mortgage rates may remain near current levels for the remainder of the year, with Fannie Mae predicting that the 30-year mortgage rate will average 6.2% in the fourth quarter of 2024 and decline to 5.7% by next year’s fourth quarter, as noted by New York Post.
As the market shifts with lower mortgage rates and increased activity, now is the time for buyers and sellers to take advantage of favorable conditions. However, with more competition and the complexities of buyer representation agreements, working with an experienced and knowledgeable real estate agent is more important than ever.
Whether you’re interested in renting your unit, selling, or searching for a new home, Platinum Properties is here to help. Contact us today to be connected with one of our trusted agents to find the best real estate solution for your needs.
