What has changed in the housing market in Arkansas since interest rates were lowered

Arkansas – The Federal Reserve lowered interest rates by.50 percentage points on Wednesday. In more than four years, this is the first rate reduction.

The federal funds rate will now fall from its previous range of 5.25% to 5.5% to a range of 4.75% to 5%, according to the Fed.

“Over the past few months, there has been a very minor increase in the unemployment rate. Therefore, the reduction in the rate today reflects the current situation where the inflation rate has dropped to 2.5 percent and efforts are being made to stop the jobless rate from rising further, according to Mervin Jebaraj, Director of the University of Arkansas’s Center for Business and Economic Research.

“Immediately after the pandemic, we had serious about inflation, and then in response to that, the Federal Reserve had raised rates consistently, and so the rates were between 5.25% and 5.5% for a long period of time,” Jebaraj explained.

Even with its supply and affordability issues, Northwest Arkansas is not likely to experience a decline in property prices.

“This is not going to help the housing market a whole lot in Northwest Arkansas,” Jebaraj stated. Regretfully, as more people attempt to purchase homes with cheaper mortgage rates, it will most likely rise. Thus, housing prices will increase.

Due to lower interest rates than they were at the start of 2024, realtors claim that there are more purchasers in the market at the moment.

“Buyers are able to afford more than they were at the beginning of the year because interest rates are better right now,” Northwest Arkansas realtor Katlyn Munch said. “Because our market is so competitive in Northwest Arkansas, home prices are still rising. A large number of people are moving here. Thus, I wouldn’t put money on expecting home values to decline because that won’t happen.”

According to Munch, the market has already lowered interest rates, something they had always anticipated. These are the statistics they should expect for the next few months, she said.

This may affect someone’s desire to list a house for sale, according to Kiley Connor, an AMC Mortgage mortgage lender.

As interest rates decline, more sellers may enter the market because they are willing to sell and are no longer concerned about the interest rates. “I am aware that many individuals were clinging to the 3%–4% interest rate,” Connor remarked. “There’s no denying that more consumers are gradually returning to the market. Many folks were hesitant to make a decision and were mostly waiting for today to see how the market would behave.

People were hesitant to list their homes for sale due to the increased mortgage rates. Fewer homeowners wanted to sell, which resulted in a shortage of inventory and increased mortgage rates for purchasers.

“We’re seeing the best interest rates that we’ve seen in probably a year and a half, if not longer, and so now’s a great time if you haven’t talked to a mortgage lender, just check in and see, you know what you could afford,” Connor said. “If you have previously bought, now is a great time just to check in and see if you could qualify for refinancing and get that monthly payment lowered.”