Mortgage rates are finally coming down in a significant way, a trend that will hopefully continue next week after the Federal Reserve meeting and beyond. According to Mortgage News Daily, rates have dropped to their lowest level since February 2023, despite increased inflation because now the labor market has taken center stage. Today’s (September 12, 2024) average 30-year fixed rate is currently just over 6 percent. To see updated rates, you can check out Mortgage News’s rate page.
According to a story in Housing Wire, buyers are not yet taking advantage of rate reductions, and some homes are seeing price reductions. But that may not last long. Journalist Julie Taylor notes on Realtor.com that August was an unusually sluggish month, which the author attributes to high interest rates and anticipation of rate cuts. Surely, many buyers may be holding off for the cuts, and August tends to be a slow month within the D.C. region in any case.
Personal finance expert Chris Butsch notes in Fortune that around 71 percent of potential home buyers are holding off until mortgage rates drop, according to one survey. However, that could change with rate reductions next week, and the market could pick up more after the election. Next week may kick off additional rate reductions after the Federal Reserve meeting. Butsch points out:
In August 2024, the famously-no-nonsense Federal Reserve Chair Jerome Powell told a group of bankers, “The upside risks to inflation have diminished” and, “The time has come for policy to adjust,” heavily implying that rate cuts would finally arrive after the Sept. 17, 2024, Federal Open Market Committee (FOMC) meeting.
Rate cuts in September may spark more activity, but it’s also an election year and some people—regardless of what party they align with—may be waiting to see what happens politically. However, some historic data indicates that election years don’t tamp down housing sales, but a variety of factors may make this year different. As a result, it may take a little longer for activity to peak, and the holidays might slow things down until January. As a result, the fall might present opportunities for buyers to jump in and get a home under contract before things get crazy in 2025, particularly if the Fed continues to bring rates lower into next year.
