The economic relief buyers have been looking for over a period of nearly two years is here.
On Wednesday the U.S. Federal Reserve announced it would be cutting its key interest rate by half a percent, a landmark in the country’s recovery from inflation that hit its highest point in four decades from 2021-22.
Leaders in the real estate industry in the metroplex said this rate cut should make an immediate difference for homebuyers and it could be just the start of an economic improvement.
For many DFW residents trying to buy a home, the last few years have been an uphill battle.
Get top local stories in DFW delivered to you every morning. Sign up for NBC DFW's News Headlines newsletter.
A report released this summer from the Case-Schiller National Home Price Index showed the median home cost in America jumped by 47% from 2020 to May 2024, up to $420,000.
On top of that, the Federal Reserve raised interest rates significantly in response to inflation that hit 7% in 2021, the highest annual inflation rate in the US since 1981. Experts said that interest rate increase drove up mortgage payments for home buyers.
Today's action by the Fed to reduce rates by 0.5% is being called an unusually large drop that some real estate leaders said would have a profound impact on the market.
Most people understand that it's a good thing when the Federal Reserve cuts interest rates.
“I save money when the interest rates go down,” said Sakinah Goodman, who is looking to buy a house.
She knows the Fed aggressively cutting rates by half a percentage point Wednesday could benefit her.
“When I started looking, the rates were crazy,” Goodman said. “So, now that they went down, I appreciate that. I’m ready.”
“My expectation is that it will bring a lot of new buyers into the marketplace,” loan officer Jesse Benavides, with Nuwave lending in Dallas, said.
He added that interest rates that bring in more buyers could also impact the housing market.
“I think this will create the momentum of swinging back towards the seller side a little bit because there will be more home buyers entering the marketplace,” Benavides said.
The rate cut also impacts other consumer finance items for individuals like credit cards and auto loans. But some experts said at a larger level the move could affect the entire DFW economy.
"This interest rate decrease is going to also help the job market because now companies who were struggling or worried about taking on those loans to fund their bigger projects now have the capital to do it," said Eric Juarez, president of NAHREP Dallas.
According to certified financial planner Bill Dendy, it can also negatively affect some people.
“The retirees who are living off their fixed income with their CDs and bonds, they're going to see those rates come back down,” Dendy said.
Dendy added that those contemplating large purchases should remember that better rates could still be coming.
“It means that the little cut we see today is just a sign of things to come,” Dendy said. “It means for individuals who are wanting to buy that house or buy that car, wait a little bit longer. It's probably going to get better if things work out the way the Fed wants it to.”
