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The Federal Reserve just lowered its benchmark interest rate by 25 basis points (0.25%). For many homeowners, that headline sounds like the start of another wave of bidding wars and skyrocketing prices. After all, lower rates mean more buyers can afford to borrow—right?
Not so fast.
Mortgage Rates Already Knew This Was Coming
Mortgage rates don’t wait for the Fed to make its move. They are tied more closely to the 10-year Treasury yield, which shifts based on what investors expect the Fed will do. Because markets had been predicting a cut for months, lenders had already adjusted rates downward ahead of time.
By the time the Fed announced the move, the impact was largely priced in. That’s why you haven’t seen mortgage rates suddenly plunge this week.
Sellers Should Temper Expectations
This is especially important for sellers to understand: a small Fed cut does not mean buyers will rush back in with higher offers. The bigger story is affordability. Prices have climbed to historic levels, and household incomes haven’t kept pace. Even if mortgage rates ease a little, buyers are still grappling with budgets stretched thin.
The Shiller Home Price Index makes this clear. After more than a decade of growth, home values are sitting near record highs. That doesn’t leave much room for another “miraculous run” like we saw in the early 2020s.
The Real Challenge Is Supply and Pricing
Housing supply remains tight because many owners are locked into older 3% mortgages and are reluctant to refinance. At the same time, new listings often come with price tags that outpace what buyers can afford—even with slightly lower financing costs. A modest Fed cut won’t solve that mismatch.
The Takeaway for Sellers
If you’re considering selling, don’t count on rate cuts alone to push prices dramatically higher. Today’s buyers are cautious, budget-conscious, and quick to walk away from homes that feel overpriced. The best strategy is still to price competitively, present your property in top condition, and recognize that the “boom years” of runaway price appreciation are behind us.
In short: the Fed’s move may make headlines, but it won’t create another housing miracle.
