Fed Rate Cut Looms—What It Could Mean for Sellers

Markets are nearly unanimous that the Federal Reserve will cut interest rates at its September meeting, with odds close to 90% for a reduction. In fact, Brown Harris Stevens Chief Economist Greg Heym noted that the August jobs report shows a softening labor market with weak hiring and rising unemployment—leaving the Fed with little choice but to cut rates by at least 25 basis points, as of his write-up on September 5. As of this morning, the odds of a 50-basis-point cut stand at 8%. While the exact size is still debated, the expectation alone is already stirring movement across financial markets.

Fed decisions have a way of moving mortgage rates—and buyers know it. For example, mortgage rates fell sharply leading up to the Fed’s first cut—dropping from 8% in October 2023 to 6.2% in September 2024, according to a national survey of large lenders by Bankrate. But by January, rates had climbed back to 7%, even after the Fed’s end-of-year cuts. This shows the Fed influences, but doesn’t directly set, mortgage rates.

The National Association of Realtors has highlighted how market anticipation of cuts can influence rates before the Fed actually acts. Typically, the expectation of a cut pushes down long-term rates like the 10-year Treasury yield, which is closely tied to the 30-year fixed mortgage rate. This preemptive dip opens the door for more buyers to re-enter the market, giving sellers an opportunity to capture momentum ahead of the official move.

If you’re considering selling, listing in early September positions your home to benefit from renewed buyer confidence. Waiting until later in the fall may mean entering a busier, more competitive pool of listings once others react to the Fed’s decision. The data backs this up: last September, nearly 1,700 homes went into contract—a 26.4% increase year-over-year and the highest since 2021—an uptick likely driven by falling mortgage rates at the time.

No Fed decision is ever set in stone, but with expectations this strong, sellers who act now are positioning themselves to meet buyers at the very moment demand could strengthen. For those considering a move, this fall presents a rare window—before the holidays slow the market—when confidence and activity are likely to align.

Serj Markarian