The housing market is facing a major slowdown this spring as high mortgage rates continue to stifle home sales. Both new and previously owned home sales have stalled, with pending home sales indicating a continued stagnation in the near future. The average rate for a 30-year mortgage has risen above 7%, making it difficult for potential buyers to enter the market.
Economists believe that lower mortgage rates could help revive the housing market, but the key to this lies in the hands of the Federal Reserve. The Fed’s fight against inflation has kept mortgage rates high, with officials indicating that they will only lower rates once they are confident that inflation is under control.
Despite the challenges, there is hope on the horizon. Housing economists expect mortgage rates to fall substantially if the Federal Reserve decides to cut its influential fed funds rate. This anticipated rate cut could lead to improved affordability and more supply in the housing market.
While there is uncertainty about when the rate cut will happen, economists see September as the most likely timeframe. Traders have priced in a 50% chance of a rate cut in September and a 63.3% chance at the following meeting in November. The housing market is eagerly awaiting a potential rate cut that could bring much-needed relief to both buyers and sellers.