Fall Interest Rates – What to Expect

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High interest rates continue to make it challenging to buy a home. Some buyers have chosen to delay their home search, holding out for mortgage rates to decline later this year.

It’s highly unlikely the 3% interest rates we saw a few years ago will return in the near future, if ever. Rates crested 7% earlier this year, but have settled into the high 6% range. Expectations are that rates could settle into the mid 6% range, but anyone hoping for mortgage rates to drop under 6% may have a long wait.

Despite high interest rates, housing demand continues to support Seattle/King County area home values. Low inventory combined with high demand will continue to drive the local market as fall approaches. While condo values haven’t increased quite as much as single family homes, prices have still increased year-over-year as condos continue to provide an affordable alternative for some buyers.

With home prices and mortgage rates impacting buyer decisions, high interest rates have also kept sellers out of the market. Hesitant to give up a 3% mortgage interest rate, they’re delaying plans to sell, adding to the low level of available inventory.

It will be interesting to see if the Federal Reserve’s anticipated interest rate cuts in September will have a significant impact on mortgage rates, buyer confidence and available inventory. It is unlikely mortgage rates will drop below 6% this year, but any decrease could be enough to benefit and motivate both buyers and sellers.