Fed Holds Rates Steady: Impact on New York City Housing

What the Fed’s Pause Means for NYC Real Estate Right Now

This week, the Federal Reserve chose to hold interest rates steady rather than move forward with another cut. While that decision plays out nationally, its meaning is more nuanced in New York City, a market where a large share of transactions are all-cash and financing works differently than in most parts of the country.

At the same time, new data shows mortgage demand slipping and refinancing activity slowing as rates tick back up. Taken together, these signals help explain why some buyers are hesitating, and why the NYC market continues to chart its own course.

Here’s what this pause may mean for buyers and sellers locally.

Nationally, Higher Rates Are Cooling Activity

Mortgage demand dropped recently as interest rates climbed to their highest level in several weeks. Refinancing demand also declined, reflecting how sensitive borrowers remain to even small shifts in rates. In much of the country, this translates into:

• Fewer buyers entering the market

• More hesitation among those already searching

• Less refinancing-driven mobility

• Slower turnover overall

These trends reinforce how dependent many markets remain on mortgage affordability.

NYC Is Different, But Not Immune

New York City doesn’t behave like most housing markets. As I noted a couple of weeks ago, all-cash transactions reached a record high in 2025, accounting for roughly 65% of Manhattan sales. That dynamic helps insulate the city from some of the immediate impact of mortgage rate changes. However, that doesn’t mean rates are irrelevant here. Rates still influence:

• Buyer confidence

• Seller expectations

• Timing decisions

• Financed buyers competing alongside cash

• The psychology of when to act versus wait

Even in a cash-heavy environment, interest rate headlines shape behavior.

Why the Fed’s Pause Still Matters

The Fed’s decision to hold steady sends a signal that policymakers are still cautious about inflation and economic momentum. For housing, that means:

• Mortgage rates may not fall meaningfully in the near term

• Buyers hoping for quick relief could stay on the sidelines

• Sellers may delay listing if they expect conditions to improve later

• Inventory may remain constrained

Rather than creating a surge of activity, a pause often prolongs the “wait and see” phase.

What This Means for Buyers

For buyers, especially those using financing, the current environment rewards preparation more than prediction. Buyers can expect: 

• Continued competition for quality listings

• Less relief from borrowing costs in the short term

• Cash buyers maintaining an edge

• Timing driven more by opportunity than by rates

Waiting for perfect conditions may mean facing more competition later if demand rebounds faster than supply.

What This Means for Sellers

For sellers, the Fed’s pause doesn’t signal weakness, but it does reinforce the importance of strategy. Sellers should keep in mind:

• Buyers remain active, but selective

• Pricing discipline matters more than ever

• Cash buyers are analytical, not impulsive

• Well-positioned listings still attract attention

In a market shaped by uncertainty, execution matters more than headlines.

The Bottom Line

The Fed’s decision to hold rates steady isn’t about what changes overnight, but rather about what it sets in motion.

Nationally, higher rates are cooling mortgage-driven activity. In NYC, where cash plays a major role, the impact is more psychological than mechanical. Confidence, competition, and timing continue to matter more than rate movements alone. For now, the market remains shaped by:

• Tight inventory

• Strategic buyers

• Cash dominance; and

• Careful sellers

Understanding how national policy filters through NYC’s unique housing landscape can help buyers and sellers decide whether to move now or wait for a different window.

If you’d like to talk through how this environment affects your own plans, whether you’re buying, selling, or weighing your options, I’m always happy to help you think it through.

Serj Markarian