Falling Mortgage Rates Are Attracting Homebuyers

As mortgage rates drop, the real estate market is showing signs of renewed buyer interest. If you’ve been waiting to list your home, now could be the perfect time to talk with an agent and take advantage of shifting market conditions.

Mortgage Rates Are Falling, Buyer Demand Is Rising

After months of rising interest rates, potential buyers are starting to return. A key reason for this shift is the Federal Reserve’s decision to cut the Federal Funds Rate for the first time since they started raising it in early 2022. While the Fed doesn’t directly control mortgage rates, its decisions influence them, and more rate cuts are expected.

Lower rates make borrowing more affordable, encouraging buyers who were previously sitting on the sidelines to re-enter the market. As Lisa Sturtevant, Chief Economist at Bright MLS, explains:

“A drop in the cost of borrowing will help fuel more homebuyer demand . . . Falling rates will also bring more sellers into the market.”

With rates likely to decrease further, the real estate market is becoming more attractive for both buyers and sellers.

How Lower Mortgage Rates Boost Buyer Activity

There is a clear link between falling mortgage rates and rising buyer activity. The graph below illustrates this, with the orange line showing the average 30-year mortgage rate and the blue line representing the Mortgage Bankers Association (MBA) Mortgage Application Index, which tracks the number of people applying for loans.

As the orange line drops (indicating lower rates), the blue line rises, revealing an increase in mortgage applications. This means more potential buyers are actively looking for homes.

What Does This Mean for Home Sellers?

The National Association of Realtors (NAR) reports that home sales increased in July after four months of declines. This uptick is good news for sellers, as more buyers in the market lead to more competition, potentially driving up offers and reducing the time your house spends on the market.

Edward Seiler, AVP of Housing Economics at MBA, supports this 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.”

As more buyers qualify for mortgages, you have a better chance of attracting competitive offers and selling your home faster.

Take Advantage of the Market Now

With more buyers entering the market and interest rates expected to continue falling, this is an excellent opportunity for you to sell your home. Preparing your home now will ensure that it stands out to the growing number of active buyers.

Bottom Line

Mortgage rates are declining, and buyer interest is rising. If you’ve been waiting for the right time to sell your house, now is the moment to take advantage of this trend. Let’s connect to discuss how we can get your house market-ready and attract the increased buyer demand.