It's been an astonishing 1,650 days since the Federal Reserve last cut interest rates, marking a period of rising rates that has significantly reshaped the housing market.

During this era of climbing interest rates, we've witnessed:

• Mortgage rates peaking at nearly 8% in October 2023
• Existing home sales dropping to levels not seen since 1995
• Home affordability hitting a 40-year low

However, there’s now a shift on the horizon. Just yesterday, the Federal Reserve announced a 0.5% cut in interest rates — a decision that’s sparked optimism across the real estate market.

While this single cut won’t dramatically change the landscape overnight, the key takeaway is that this move signals the beginning of a more extended period of rate reductions, rather than the end.

The Ripple Effect of Lower Mortgage Rates

Lower interest rates will naturally have a few immediate effects, such as:

• An increase in homebuyers entering the market
• Greater competition among buyers for available properties
• Potentially more homeowners considering refinancing their mortgages

However, the most critical impact could be on inventory.

Could Lower Rates Lead to More Homes for Sale?

A recent survey from Bankrate found that a significant majority of homeowners are hesitant to sell in the current market, with just 5% feeling comfortable listing their homes while mortgage rates remain at 6% or higher. But the survey also uncovered a beacon of hope for the housing market: over 35% of homeowners said they would consider selling if mortgage rates dip below 6%.

This shift in homeowner sentiment could be a game changer. More homes on the market would likely bring much-needed stability and health to the real estate sector, benefiting both buyers and sellers.

A Positive Outlook for Buyers and Sellers

While we can't expect overnight changes, this rate cut marks the start of what could be a more favorable market for everyone. A gradual increase in homes hitting the market, combined with more affordable mortgage rates, could lead to a more balanced and sustainable housing market in the months ahead.

As always, I’m here to keep you updated on what’s happening in the market and how these changes may affect your buying or selling decisions.

Stay tuned for more insights.