At long last, “the time has come” for interest rate cuts. On Friday, August 23rd, Federal Reserve Chair Jerome Powell offered a glimmer of hope to prospective homebuyers and sellers.
Speaking at the Federal Reserve’s annual symposium held in Grand Teton National Park, Jackson Hole, WY, Powell remarked, “We do not seek or welcome further cooling in labor market conditions. The time has come for policy to adjust.”
This marks a significant shift from just last month, when Powell suggested that an interest rate cut from the current 23-year high “could be on the table.”
“From ‘on the table’ at July’s meeting to ‘the time has come’ in today’s Jackson Hole address, Chair Powell also stated that ‘my confidence has grown that inflation is on a sustainable path back to 2%,’” notes Realtor.com® Chief Economist Danielle Hale. “These are clear signals that a Fed rate cut is imminent.”
What to Expect in September
The Fed’s next policy meeting, scheduled for September 17–18, is now highly anticipated, with everyone eager to know how significant this expected rate cut will be.
“My expectation, along with many investors, is that the Fed will make a 25-basis point cut in September, likely the first of several that will follow in late 2024,” Hale explains. “There is also a possibility that the September cut could be as large as 50 basis points.”
The size of the cut will depend on inflation and labor market data released between now and the September meeting. Hale emphasizes that the Fed will continue to rely on this data. “Chair Powell noted that the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” she says.
The Potential Impact on the Real Estate Market
The Fed’s upcoming decisions are poised to have a significant impact on mortgage rates and the broader real estate market. “Since these cuts are widely anticipated, they’ve already contributed to mortgage rates dropping into the mid-6% range, and we could see further easing in the months ahead,” Hale says. “In fact, the Realtor.com 2024 Housing Forecast Update now expects the typical 30-year fixed-rate mortgage to fall into the low 6% range by the end of the year.”
To stay updated on mortgage rates, keep in touch with your lender! If you need a recommendation for a trusted local lender, do not hesitate to reach out to Scott and the Smolen Team.
