If you've been holding off on selling your home because you're unsure if buyers are out there, now may be the perfect time to reconsider.
For months, high mortgage rates have kept many buyers on the sidelines, but the tide is shifting. Mortgage rates are starting to decrease, thanks to various economic factors. Just recently, the Federal Reserve reduced the Federal Funds Rate for the first time since March 2022. While the Fed doesn’t directly control mortgage rates, these rate cuts set the stage for further drops. With additional cuts expected, mortgage rates may decline even more, encouraging more buyers to re-enter the market.
As Lisa Sturtevant, Chief Economist at Bright MLS, puts it:
“A drop in the cost of borrowing will help fuel more homebuyer demand... Falling rates will also bring more sellers into the market.”
Falling Rates = Increased Buyer Activity
When mortgage rates drop, buyer activity rises. This relationship is clearly shown in the graph below, where the orange line represents the average 30-year fixed mortgage rate, and the blue line shows the Mortgage Bankers Association (MBA) Mortgage Application Index, which tracks the number of mortgage applications.
As mortgage rates fall (orange line), the Mortgage Application Index (blue line) increases, signaling that more buyers are starting to engage in the home buying process.
What This Means for You
According to the National Association of Realtors (NAR), home sales saw an increase in July after four months of decline. This uptick in buyer activity could work in your favor if you're considering selling your home. More buyers lead to more competition, which can result in higher offers and quicker sales.
Edward Seiler, AVP of Housing Economics at MBA, shares a promising outlook:
“MBA is expecting that slower home-price appreciation, coupled with lower rates, will ease affordability constraints and lead to increased activity in the housing market.”
With the market becoming more accessible to a broader range of buyers, now may be the ideal time to prepare your home for sale.
The drop in mortgage rates is already driving more buyers back into the market, and experts predict this trend will continue. If you're thinking about selling, now is the time to connect with a local real estate agent to capitalize on the growing buyer demand and get your home ready for sale.
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