The Federal Reserve just made its first interest rate cut of 2025, lowering short-term rates by 25 basis points (0.25%). While many expected this move, it wasn’t driven by inflation (which has actually been edging higher lately). Instead, the Fed pointed to slowing job growth and rising unemployment as the reason for easing rates.
So, what does that mean for real estate?
Mortgage Rates Are Easing
Mortgage rates had already started dipping before the Fed’s announcement thanks to weak job numbers in August. The average 30-year fixed mortgage has slid from about 6.50% down to 6.25% in just two weeks. That quarter-point drop might not sound huge, but it translates into roughly $50 less per month on a typical mortgage payment. For buyers who’ve been on the fence, this small shift can make a real difference in affordability.
Consumer Spending Still Strong
On the other side of the economy, Americans are still swiping their credit cards. Retail sales jumped 0.6% in August, beating expectations of just 0.2%. Since consumer spending accounts for nearly 70% of the U.S. economy, this shows households are still confident—even as job growth slows.
What It Means for Buyers & Sellers
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Buyers: Lower mortgage rates could improve affordability, but keep in mind that if demand picks up, home prices may remain firm.
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Sellers: The market may see more buyers re-entering as financing gets a little easier. Strong consumer spending also points to continued economic resilience, which supports housing demand.
The bottom line? Even a small Fed rate cut can ripple through the housing market, making it a good time to revisit your real estate goals.
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