CHARLOTTE, N.C. — Analysts have stated another cut in the federal interest rate is not lowering mortgage rates and it's having an impact on the housing market.
David Hoffman of Hoffman Realty in Charlotte told WCNC Charlotte he believes the economy is going to keep moving in the right direction, but inflation is still high. That's going to limit how much movement we'll see in the housing market.
"From 2017 through 2020 inflation was under 2%," Hoffman said. "Then over the last three-and-a-half, four years, it was almost 6% on average."
He said although inflation is coming down, about 2.4% in September, the U.S. still has a ways to go to get back to pre-2020 levels. Hoffman said 2.1% is the sweet spot, but it's difficult to get there.
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"We have to overcorrect and almost have stagnation, maybe even deflation, to get back to normal," Hoffman said. "What that means for the housing market is until inflation goes back to normal, bonds are not attractive. And until bonds become attractive again, mortgage rates won't come down."
He said that's bad news in the short run for prospective homebuyers.
"So as long as inflation is above where it needs to be and prices are too high, mortgage rates are gonna stay high," Hoffman warned. "And so that's the bad news in the short run. But the good news is, there's a lot of demand. The good news is the stock market went up 6% in the last week."
He said that points to consumer confidence building.
"There's a lot of demand that's been pent up," Hoffman said. "Prices starting to come down, probably not low enough, but more and more people are getting off the fence. And so in 2025, I see homes that need work, going lower and lower. And I see homes that are in great condition with low inventory going up."
Hoffman said mortgage rates will remain high which isn't likely until late next year, with homebuyers in the $200,000 to 400,000 range feeling the sting of higher rates the most. Still, the Charlotte real estate agent said he expects to see prices coming down because high supply is pushing down demand.
"They're like, OK, I'm giving up a 2.75% rate for a 6.5% rate, but the $600,000 on our home is now $550,000," Hoffman explained. "So they're getting a little bit of relief in the lower prices."
While the real estate market in the Charlotte area remains competitive, Hoffman said buying or selling a home also depends on your timing.
"I think that if you're looking to move in the next two to three years, I would do something," he said. "Now if you're going to be in your home for at least three years, you can wait. But if you want to wait another one or two years, the challenge will be that when you wait for rates to come down, it's because prices have come down. So if you have a home to sell, you don't want to hold on to that and lose your equity just waiting for rates to come down."
Contact Jane Monreal at jmonreal@wcnc.com and follow her on Facebook, X and Instagram.