BAM Key Details

  • On February 1, the Federal Reserve announced a 25 basis-point rate hike, the smallest hike since last March. 
  • Lawrence Yun stated, “that is good news” for homebuyers who have been waiting for mortgage rates to come down. 

As expected, The Federal Reserve announced a rate hike Wednesday afternoon.

The 25 basis-point rate hike does, however, point to some positive news. As the smallest rate hike since last March, this shows that the central bank is feeling more confident as it works to combat inflation. 

In its statement, The Fed stated more rate increases are coming, as inflation hasn’t been defeated just yet. In his press conference, Jerome Powell said they believe a couple more hikes will likely do the job. 

So, what does this mean for the real estate industry? Read on for what NAR Chief Economist Lawrence Yun says about the Fed’s most recent rate hike. 

What the Lastest Rate Hike Means for the Housing Market

Between inflation and affordability issues, many have altered their home-buying plans, waiting for some relief in today’s market.

Yun believes this may be the good news people have been waiting for—though it may still take some time before mortgage rates fall under 6%. In an email statement, Yun stated, 

The Fed is showing its willingness to adjust policy based on data. Softer inflation of late led to a softer rate increase today. As inflation calms further from rising apartment vacancies in upcoming months, the Fed will adjust to a no-rate increase by the middle of the year and even a rate cut by December. That is good news for mortgage rates, which will possibly fall to 5.5% by the year end.

Lawrence Yun

Chief Economist and Senior Vice President of Research, NAR

Of course, no one can fully predict what will happen with mortgage rates. And despite the challenges of today’s market, there are some unique buying opportunities, which can vary greatly based on location. Be ready to dive into your local market data and have real conversations with people about their options as they navigate their financial situations. 

For more on what the latest rate hike means for the housing market, watch today’s Walk Thru, where Byron Lazine breaks it down: