Navigating Today’s Housing Market: Interest Rates, Low Inventory, and Future Opportunities

At its most recent meeting in January, the Federal Reserve chose to keep interest rates unchanged, maintaining the target range at 4.25% to 4.50%. Fed Chair Jerome Powell explained that policymakers are taking a wait-and-see approach, stating that officials are “waiting to see what [Trump] policies are enacted” before making any decisions about adjusting rates. This cautious stance reflects the Fed’s focus on economic stability as it monitors inflation trends, labor market conditions, and potential fiscal policy changes under the new administration.

While the Fed’s decision was widely anticipated by economists and bond market investors, it has a significant impact on the housing market—particularly for potential homebuyers who have been closely watching interest rate movements. Many buyers who have been sitting on the sidelines, hoping for a rate cut to improve affordability, were left disappointed by the Fed’s inaction. With mortgage rates still elevated compared to the historically low levels seen in recent years, affordability remains a major concern, especially for first-time buyers and those looking to upgrade to larger homes.

Higher borrowing costs have already contributed to slower home sales, as elevated monthly payments put homeownership out of reach for some buyers. Additionally, the persistence of high interest rates has discouraged some sellers from listing their homes, further tightening inventory and keeping prices elevated. The combination of high borrowing costs and limited housing supply has made it increasingly difficult for buyers to find affordable options, creating a challenging market dynamic.

For well-qualified buyers hesitant to purchase due to higher interest rates, refinancing in the future may be a viable option. This strategy allows buyers to take advantage of current market conditions while keeping the possibility of securing a lower rate later on.

While today’s rates—around 7%—may seem high compared to the historically low 2%-3% rates seen during the COVID-19 pandemic, they remain significantly lower than rates seen in previous decades.

Courtesy of Sofi.com

The next opportunity for a significant change in rates will be mid-March, at the Fed's next meeting.

If you’re uncertain what your best option is, contact us at 412-265-4241. We're happy to guide you indetermining what's best for you.