Fed Meeting Tomorrow: What to Expect and How It Could Impact the Housing Market

As the Federal Reserve prepares to meet tomorrow, the housing market is closely watching for the outcome. There is a high probability of a 25-basis point decrease in interest rates. While the Fed has made no official announcements, the markets—and especially the bond market—are already pricing in this move. Here’s what we can expect and how it could shape the real estate landscape in the months ahead.

Mortgage Rates Already Responding

Mortgage rates have already started to shift in response to market expectations, thanks to bond traders getting ahead of the Fed's likely decision. As of September 17, the 30-year fixed mortgage rate stood at 6.12%. This movement suggests that even if the Fed announces the rate cut, we might not see immediate relief in mortgage rates beyond what’s already been priced in. However, the signal to buyers is clear—rates are starting to improve, which could unlock new opportunities in the near future.

More Sellers, More Buyers

One of the interesting dynamics in today’s market is that most sellers are also buyers. As interest rates decline, many would-be sellers who’ve been sitting on the sidelines, reluctant to trade in their historically low rates for higher ones, could feel more confident entering the market. This increase in listings would help build upon more healthy inventory levels and could stimulate more purchase activity.

A Busy Fall Ahead?

After a historically low spring sales season, a rate reduction could give the housing market a much-needed jumpstart heading into the fall. Improved rates tend to lower monthly mortgage payments, making homes more affordable for buyers who have been priced out by the rapid rate increases over the past two years. With more sellers entering the market and buyers finding more attractive financing options, this fall could bring a surge of activity to what has otherwise been a sluggish 2024.

Optimism in the Air

While we await the official outcome of tomorrow’s Fed meeting, the general sentiment is one of cautious optimism. If the expected rate cut materializes, it will likely further bolster confidence in the housing market. And while the immediate impact on mortgage rates might be modest, the ripple effect on inventory and sales activity could be significant.

Stay tuned—this could be the shift we’ve all been waiting for.

Source: Florida Realtors