The Window Buyers Have Been Waiting For?

The Fed paused rates in the last week of July 2025, and then a disastrous jobs report landed two days later. That made a rate cut this year two to three times more likely than it was a few days earlier. At the same time, listings were up 25% to 50% from a year before. Here is what I said that means for buyers and sellers.

First, a clarification I make often. If the Fed lowers rates, that does not automatically mean mortgage rates come down. They are not directly correlated, although they tend to follow over time. Several times in the last three years the Fed made a change and mortgage rates went the other way. If you want rates to come down, watch inflation. And remember that bad news is good news for mortgage rates. When the economy weakens and the stock market drops, you will sometimes see a headline two or three days later that mortgage rates are at their lowest point in months.

On inventory, anyone looking on Redfin or Zillow can see there are more homes for sale than a year ago, about 25% to 50% more depending on the market. The Sun Belt and coastal markets are hit differently than the Northeast, but by and large inventory was increasing. Buyers want to call it the crash. Some sellers think a small price cut will bring a buyer. Sometimes it does not.

If you are selling, you need realistic expectations. I know sellers who listed at the price their agent suggested and got no showings for two weeks, then cut the price and still got no more. Be ready to be on the market 20 to 30 days. I believe the average nationally was 25 to 35 days at the time. That assumes the home is priced right and does not need a lot of work. Listen to a qualified listing agent. If you do not need to sell, you can wait until spring of 2026, but you are taking a risk that values could be different.

If you are a buyer thinking this is the cliff you have been waiting for, be careful. When people waited after the financial crisis, prices started climbing the next year. When the pandemic froze the market for a couple of weeks, home values went on to rise 30% to 35%. Zillow and Redfin did lower their forecasts for 2025, and we may see negative appreciation in some places. But real estate does not usually fall off a cliff. The number one reason the market is frozen is affordability, and I saw signs pointing to lower rates later that year or early next. It could be a better decision to buy when there is less demand and refinance later than to jump in when everyone else does. NAR economists estimated that a 6% rate would put a median-priced home within reach of about 5.5 million more households, and that about 10% of them could buy within 12 to 18 months of that kind of drop. That kind of demand pushes prices.

Nobody knows what happens, and there is always risk. My advice is to make sure that if you buy this year it is a 5 to 7 year house, that it makes financial sense, and that you are not expecting to win right away.

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