Will the Recent Rate Cut Lower Home Prices This Fall?

By Jeff Latham

Our team has helped thousands of buyers and sellers achieve their real estate goals. We are Real Estate Unlimited, meaning we can sell your home, buy your home, help you buy a home, build you a home, remodel your home, and get you the best home loan. We guarantee to sell your home or we will buy it.

If you’ve been hoping for home prices to drop, the Fed’s recent rate cut might sound like good news. But before you get too excited, here’s something important to remember: a rate cut doesn’t automatically mean prices will go down. In some places, it could even push prices up.

Here’s what you need to know.

How the rate cut affects mortgage rates. In mid-September, the Fed lowered its main interest rate by 0.25%, marking the first rate cut of the year. This move suggests that further cuts may be ahead. It has already caused mortgage rates to drop a little. The average 30-year fixed mortgage is now just above 6%, which is a welcome change from the 7% highs we saw earlier this year.

But here’s the catch: Mortgage rates don’t move exactly with the Fed’s actions. They’re more closely tied to the 10-year Treasury yield, which is influenced by inflation, bond markets, and investor sentiment. So, even if the Fed cuts rates again, mortgage rates might not keep dropping, and they may not stay low.

Also, even when mortgage rates fall, home prices don’t always drop with them. In fact, lower mortgage rates can bring more buyers into the market, which leads to more competition. In areas where there aren’t many homes for sale, this increased demand can actually push prices higher.

 What this means for you. The good news is that the inventory is improving. Recent reports show that the housing supply is up by more than 30% compared to last year. Some markets are seeing prices cool off a little, while in other areas, prices are continuing to rise.

If you’re a buyer, now could be a good time to get back into the market. With rates a little lower, you might have more room to negotiate, especially if sellers are adjusting to a slower market. But don’t wait too long, hoping for a big drop in prices. Experts say that while price growth is slowing down, we likely won’t see major price drops unless mortgage rates fall a lot more.

If you’re a seller, this is your chance to be strategic, since the market is changing. While some buyers are returning because of the lower rates, others remain sensitive about prices. Setting the right asking price and working with a local agent who understands your market’s dynamics can make a big difference.

The Fed’s rate cut is just one part of the picture. This fall, buyers and sellers who stay informed and flexible will be in the best position to make a smart move.

Thinking about buying or selling a home? Just reach out through call or email, and I’ll help you make a solid plan—the earlier, the better. I look forward to hearing from you!