A late-summer window of opportunity with relatively low mortgage rates is upon us, but it may be short-lived.
Late August is typically a slow time for housing activity, with people on vacation and preparing kids to return to school. With mortgage rates now falling on news coming out of a Fed meeting in Jackson Hole, the market could actually get a little less sluggish in this late-summer season. The market is anticipating a September interest-rate cut by the Fed. That’s already being priced into mortgage rates, which could pop back up depending on how the jobs and inflation reports come in early next month. Mortgage rates are unlikely to fall further after the September 17 Fed meeting.
“Serious homebuyers should call off their end-of-summer vacations and plan to hit the open houses and their Redfin apps instead of the beach,” said Redfin Chief Economist Daryl Fairweather. “A lot of people mistakenly assume that an interest rate cut in September will cause mortgage rates to fall. But the market–not the Fed–dictates mortgage rates, which are falling after Jerome Powell signaled from Jackson Hole that a September rate cut is all but guaranteed.”
Homebuyers: Keep your eyes peeled for new listings, price drops and lower mortgage rates, giving you more purchasing power
Talk to your lender about today’s rates, and how to lock them in. Clear your weekend calendar to visit open houses. It’s also a good time for your real estate agent to reach back out to listing agents of homes you recently toured but thought were priced too high. With lower rates and a little more purchasing power, you may be in a better position to strike a deal with the seller.
The daily average mortgage rate dropped to 6.55% today, near the lowest level in 10 months. That means a homebuyer on a $3,000 monthly budget has gained roughly $20,000 in purchasing power since May, when the daily average rate hit a recent peak of 7.08%. A buyer on that budget can afford a $458,750 home with today’s mortgage rate, compared to the $439,000 home they could have bought with May’s peak.
Sellers: Do that price reduction you’ve been considering, and amp up your marketing efforts
Lower rates should bring some reluctant buyers back to the market, so now is a good moment to make your listing pop online with a price drop, and maybe even fresh photos. Your listing agent should check back in with buyers who showed interest but didn’t bite.
Homeowners: List now instead of waiting until after Labor Day
And if you’re getting your home ready to list in the Fall, move up your timeline if you can. Falling rates are likely to lure more buyers to the market, so strike while the iron is–relatively speaking–hot.
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Rachel Musiker