If you’ve been holding off on listing your home because you’re concerned about a lack of buyers, this is your signal that it might be time to connect with an agent.
After months of high interest rates keeping potential buyers on the sidelines, the market is beginning to change. Rates are already dropping due to various economic factors, and just yesterday, the Federal Reserve lowered the Federal Funds Rate for the first time since they started increasing it in March 2022.
Although the Fed doesn’t directly control mortgage rates, their recent actions create favorable conditions for rates to decline even further—especially with more rate cuts anticipated into next year. As mortgage rates drop, more buyers are re-entering the market. According to Lisa Sturtevant, Chief Economist at Bright MLS:
“A reduction in borrowing costs will drive increased homebuyer demand . . . Lower rates will also encourage more sellers to enter the market.”
The best part? You can capitalize on this renewed buyer interest.
As Rates Decrease, Buyer Activity Increases
The graph below demonstrates the correlation between declining mortgage rates and increasing buyer activity. The orange line represents the average 30-year fixed mortgage rate, while the blue line reflects the Mortgage Bankers Association (MBA) Mortgage Application Index, which measures the volume of mortgage applications.
As shown, when mortgage rates (orange) decrease, the Mortgage Application Index (blue) increases, indicating more people are re-entering the market (see graph below):
What This Means for You
The National Association of Realtors (NAR) reported an increase in home sales in July, marking a positive shift after four consecutive months of decline. If you’re a homeowner considering selling, this rise in buyer activity is to your advantage.
More buyers create more competition, which can result in higher offers and a quicker sale for your home. Edward Seiler, AVP of Housing Economics at the Mortgage Bankers Association (MBA), anticipates this trend to continue:
“MBA expects that slower home-price appreciation, combined with lower rates, will reduce affordability challenges and boost housing market activity.”
Overall, the market is becoming more accessible to a broader range of buyers, potentially increasing interest in homes like yours.
With more buyers entering the market, now is a great time to prepare your home for sale.
Bottom Line
The recent drop in mortgage rates is already attracting more buyers, and experts predict this trend will continue. Let’s collaborate to capitalize on the growing buyer demand and prepare your home for sale.
