Fed rate cuts impact housing market amid ongoing high prices

The U.S. housing market is facing a significant supply and demand imbalance, with more buyers than available homes. This situation worsened as mortgage rates surged from historic lows in 2020 to their highest levels in decades last year. Anticipation of Federal Reserve rate cuts has led to a decrease in mortgage rates, which could encourage homeowners to sell, potentially increasing housing inventory. However, while lower rates may stimulate demand, they could also exacerbate affordability issues, making it harder for buyers to secure homes. Experts warn that a drop in rates could lead to a surge in demand, complicating the already challenging housing landscape. The current average mortgage rate of 6.2% is an improvement from last year's peak of 7.8%, but the overall housing market remains constrained by high prices and low supply, leaving many potential buyers in a difficult position.