On Nov. 6, the Fed cut interest rates by 0.25%, down to a range of 4.5% to 4.75%. With inflation just shy of the Fed's 2% goal, the move should provide some relief for borrowers. The Fed is widely expected to continue cutting rates into 2025, which could snowball into bigger savings.

While the Fed doesn’t directly set mortgage rates, its benchmark “fed funds rate” tends to set the direction for other loans, including mortgages. Leading up to the Fed's much-anticipated rate cut in September - the first in more than four years, mortgage rates dropped significantly.

And while the rate trajectory didn’t remain as favorable in October, current November rates remain about a point below 2024 peaks.
For homebuyers, this development brings a renewed sense of optimism as lower mortgage rates often mean significantly improved purchasing power.

Current conditions suggest a market that is still competitive, albeit less intense than last summer. While some homes are receiving fewer offers, the most desirable properties are still moving quickly.

Even as overall affordability has improved slightly due to lower mortgage rates, demand continues to outweigh supply, applying upward price pressure. The median home price climbed to $428,096 in September, up 3.9% compared to last year.

On a positive note, the market currently has a 4.2-month supply of homes of homes for sale, a noticeable increase from the previous year. Sales remain steady but depressed. There were 403,728 homes sold, down 4.8% from 423,893 a year ago. A balanced market typically requires a six-month supply.

This could be an opportune moment for sellers to list their homes, allowing them to capitalize on the increased buyer interest. And as most sellers become buyers themselves, lower rates are helpful as they consider their next home purchases.

However, it is still essential for sellers to evaluate overall market conditions, including local inventory levels and economic factors, to ensure proper pricing. If a lot of hesitant buyers start making offers on available homes, competition could push prices higher.

In essence, the Fed's decision to lower rates has created a dynamic housing market, where both buyers and sellers are poised for a more active environment.

Many on both sides are still waiting for even lower interest rates. Mortgage interest rates hew closely to the yields on the 10-year Treasury yield, which swooned after the first Fed rate cut. Since, yields on this long-term debt have pushed back near 2024 highs.

The presidential election added a layer of unpredictability. After Donald Trump's stunning win, investors and traders are concerned about the economic effects.

The political climate also influences migration. A recent nationwide survey revealed that nearly a quarter of U.S. adults consider politics when choosing where to live. The migration patterns of voters, particularly in swing states, could significantly impact housing, as well as politics.