Falling Mortgage Rates Are Bringing Buyers Back

Falling Mortgage Rates Are Bringing Buyers Back

If you’ve been hesitant to list your house because you’re concerned about buyer activity, this is your sign to consider talking with an agent.

After months of high rates keeping buyers on the sidelines, the market is beginning to shift. Rates are already decreasing due to various economic factors, and recently, the Federal Reserve cut the Federal Funds Rate for the first time since it started raising rates in March 2022. While the Fed doesn’t directly control mortgage rates, this move creates a favorable environment for them to drop further, especially with more cuts anticipated next year. Lower mortgage rates are encouraging more buyers to re-enter the market. Lisa Sturtevant, Chief Economist at Bright MLS, states:

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

The best part? You can capitalize on that renewed buyer interest.

As Rates Fall, Buyer Activity Goes Up

The graph below demonstrates the connection between declining mortgage rates and increasing buyer activity. The orange line represents the average 30-year fixed mortgage rate, while the blue line shows the Mortgage Bankers Association (MBA) Mortgage Application Index, which tracks the number of mortgage applications.

As illustrated, as mortgage rates (orange) decrease, the Mortgage Application Index (blue) rises, indicating that more people are starting to re-engage in the homebuying process (see graph below):

What This Means for You

According to the National Association of Realtors (NAR), home sales rose in July, marking a positive shift after four consecutive months of declines. If you're a homeowner considering selling, this increase in buyer activity is beneficial for you.

More buyers create increased competition, which can result in higher offers and a shorter time on the market for your home. Additionally, Edward Seiler, AVP of Housing Economics at the Mortgage Bankers Association (MBA), notes that this trend is expected to continue:

“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.”

Overall, the market is becoming more accessible to a broader range of buyers, which could lead to even more people interested in purchasing a home like yours.

With more buyers entering the market, now is the perfect time to begin preparing your house for sale.

Bottom Line

The recent drop in mortgage rates is already attracting more buyers to the market, and experts expect this trend to persist. Let’s collaborate to capitalize on this increased buyer demand and prepare your house for sale.