Bev Murray Real Estate

As we step into September, all eyes are on the Federal Reserve (the Fed). With signs of cooling inflation and a slowing job market, the expectation is that the Fed will cut the Federal Funds Rate during their upcoming meeting. Mark Zandi, Chief Economist at Moody’s Analytics, says:

     They’re ready to cut, just as long as we don’t get an inflation surprise between now and September, which we won’t.    

But what does this mean for Sarasota’s housing market, and more importantly, for you as a potential homebuyer or seller?

The Federal Funds Rate is one of several factors that can influence mortgage rates, along with the broader economy and global events. When the Fed lowers this rate, it signals what’s happening in the overall economy, and mortgage rates typically respond. While a single rate cut might not cause a dramatic drop in mortgage rates, it could contribute to the gradual decrease we’re already seeing.

As Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), points out:

    Once the Fed kicks off a rate-cutting cycle, we do expect that mortgage rates will move somewhat lower.   

Experts agree this upcoming rate cut won’t be a one-time event. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), adds:

     Generally, the rate-cutting cycle is not one-and-done. Six to eight rounds of rate cuts all through 2025 look likely.   

What This Means for Sarasota's Housing Market

Projections from industry experts like Fannie Mae, MBA, NAR, and Wells Fargo suggest that mortgage rates will likely continue their gradual decline through 2025, supported by these anticipated Federal Funds Rate cuts.

Here’s why this could be beneficial for both buyers and sellers in Sarasota:

Easing the Lock-In Effect for Homeowners

For homeowners who have been hesitant to sell, lower mortgage rates may help ease the "lock-in effect." This is where homeowners feel stuck with their current home because their mortgage rate is lower than today’s rates. If you’ve been holding off on selling due to the fear of losing your low-rate mortgage and facing higher costs, a gradual reduction in rates may make the idea of selling more appealing.

However, it’s worth noting that while lower rates could entice some sellers back into the market, it’s not expected to create a flood of inventory.

Boosting Buyer Activity

For those looking to buy in Sarasota, any reduction in mortgage rates makes the market more inviting. Lower rates can decrease the overall cost of homeownership, making it easier for potential buyers to enter the market. If you’ve been waiting for rates to drop before making a move, this could be the opportunity you’ve been waiting for.

What Should You Do?

While we don’t expect a dramatic drop in mortgage rates, the gradual decline could still provide the opportunity you need to take the next step, whether you’re looking to buy or sell.
Jacob Channel, Senior Economist at LendingTree, offers wise advice:

      Timing the market is basically impossible. If you’re always waiting for perfect market conditions, you’re going to be waiting forever. Buy now only if it’s a good idea for you.   

Bottom Line

With inflation improving and the job market slowing, the anticipated Federal Funds Rate cut could have a positive impact on mortgage rates in Sarasota. While the changes may be gradual, they could unlock new opportunities for buyers and sellers alike. When you’re ready to explore your options, let’s connect. I’ll make sure you’re prepared to take advantage of the current market when the time is right for you.