Will Homes Become More Affordable After a Fed Rate Cut?

By David Pannell

David Pannell is the Managing Broker and founder of Cities Real Estate, a forward-thinking brokerage based in Fort Worth, Texas. A licensed Realtor since 2005 and a broker since 2010, David is known for his expertise in helping families sell homes quickly, especially those navigating the complexities of probate and inherited property.

Have you ever heard that the Federal Reserve cut rates and immediately assumed mortgage rates would drop next? It’s one of the most common misunderstandings I hear from buyers and sellers. So let’s clear it up, because what actually happens is very different from what most people expect.

First, here’s the part that surprises almost everyone. When the Federal Reserve cuts rates, it almost never affects mortgage rates. The Fed controls short-term rates, things like credit cards, car loans, and equity lines of credit. Mortgage rates, on the other hand, are tied to the bond market and long-term confidence in the economy.

That difference matters. Mortgage rates move based on inflation, job growth, consumer spending, and overall market stability. This is why you can hear about a Fed rate cut and still see mortgage rates stay flat or even move higher.

In many cases, changes show up twelve to eighteen months after broader economic shifts, not right when the headlines hit.

How do rate cuts affect the housing market? When rate cuts are announced, buyer confidence usually increases. More buyers start paying attention, more buyers jump back into the market, and competition picks up. As demand grows, home prices often rise. That is why lower rates can actually make homes less affordable, not more.

Right now, the market looks different: There’s more inventory, homes are sitting longer, and some listings have expired or been relisted multiple times. And this is exactly where opportunity starts to appear for buyers who are prepared and patient.

Instead of waiting for rates to magically drop, smart buyers focus on what they can control: price, location, and negotiation. Sellers who have not sold are often more open to flexible terms, creative solutions, or price adjustments. In this market, the best buyer is not always the highest offer. It is the buyer who helps the seller move forward with confidence.

Is there an advantage to buying a home now? There is a long-term advantage to buying real estate today. If you secure a home at a discounted price now, you can always adjust the rate later through a refinance when conditions change. What you cannot undo is overpaying once prices climb again.

So my advice stays simple. Do not chase the perfect house; focus on the right neighborhood, and buy based on value because you can fine-tune the details later.

And if you want to walk through what this means for your specific situation, my calendar link is below, and we can talk through your options together.

Book a free strategy call with me.

You can also contact me at (817) 797-9047 or david@citiesrealestate.com. I’m here to help.