Market News: What You Need to Know

For most of you, I know the recent Federal Reserve news will have hit your newsfeed by now. But just to get you up to speed, on September 18, the Federal Reserve announced that they were lowering interest rates–for the first time since March 2020—by half a point. This move comes after a long period of trying to control inflation and repair the economy, which the Fed now believes to be better in shape, hence the decision to cut rates.

This is certainly major news for the U.S. economy in general, but what does it mean for the real estate industry? This cut has been expected, so the market actually began to see the effects even before it was officially announced. Mortgage rates are at 6.13% (at the time of publishing) and lower than they’ve been in two years. According to a Bloomberg article, “Applications to refinance mortgages surged for a second week as more Americans capitalized on the cheapest borrowing costs in two years.”

Although the rates are nowhere near the record low they hit in January 2021, they’ve come down significantly from their high in October 2023. For buyers struggling with financing a home purchase, even a minimal decrease in mortgage rates can make a major difference in the long run. It appears that the steady decreases have reinvigorated many buyers’ plans to finally seriously search for their first or next home. Experts predict that rates will continue to drop, finally dipping below 6% in 2025 and perhaps even below 5.5% by the end of 2025.

Lower rates will mean more competition for buyers, with many people in similar boats waiting for the right time to make their move in the market, thus potentially leading to higher home prices. However, after a long drought of inventory, we’re seeing more sellers listing their homes, which could help to combat an issue of demand outpacing supply. In fact, according to a Mansion Global article, the country’s inventory levels are at the highest they have been in the past four years. Buyers, this means not only will you be purchasing with lower rates, but you’ll also have more listings to choose from—this is great news!

In Seattle, inventory is up (as of August) by 31.9% year over year to 3.4 months. In Tacoma, inventory has seen a year-over-year decrease compared to the same time last year, and is currently at 2.1 months of supply. Both markets are considered seller’s markets, but with these levels of inventory, it is certainly still possible to find your dream home without feeling as though you’re compromising.

I recommend getting started on your purchase or selling journey now rather than later so that you’re ahead of the curve. Even if you want to wait until 2025, we can put a plan in place now so you’re ready to hit the ground running in the new year. Reach out to me today for more market news about your neighborhood and what the data means for your individual goals. The market is constantly evolving, so let’s evolve with it!