The housing market could benefit from a Fed rate cut, which is a definite boost to the housing market, says Greg McBride, CFA, chief financial analyst for Bankrate.
While homebuyers would welcome news of lower rates, they could also face the same run-up in home prices brought on the last time the Fed cut rates, in 2020.
Lower interest rates could stimulate both increased home supply and demand, McBride says. The best-case scenario is a gradual decline in rates that is beneficial to home builders, homebuyers and home sellers.
The Fed raised the federal funds rate a total of 11 times from March 2022 to July 2023, holding it between 5.25% and 5.5%, affecting home prices and sales.
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