I
nvestors anticipate a 25‑basis‑point reduction in the Fed’s policy rate before year‑end, yet mortgage rates may remain firm. The 30‑year fixed‑rate mortgage has climbed to 6.36 % as of Dec 8, up from 6.27 % a week earlier. Analysts predict this would be the Fed’s third 25‑bps cut in 2024. Despite the likelihood of a December cut, Bright MLS Chief Economist Lisa Sturtevant cautions that lenders have largely priced in the move, so mortgage rates may not fall dramatically.

    Market participants are wary of the Fed’s forthcoming economic projections, which could signal the policy stance for 2025. A single cut next year appears plausible, but the FOMC is increasingly split. In such a divided setting, even minor adjustments by a few members could shift the 2026 median forecast and trigger sizable market reactions.

    Williamson projects a “measured” recovery in real estate through 2026. Home‑price growth is expected to moderate, incomes should outpace price gains, and rates may ease marginally. These dynamics suggest a steady rebound in purchasing power, even if mortgage rates stay near 6 %.

    The Fed’s dual mandate—controlling inflation while supporting employment—has prompted many FOMC participants to move from a restrictive stance toward neutrality. Realtor.com chief economist Danielle Hale explains that after one more cut, short‑term rates could settle in neutral territory. In that scenario, committee members would likely require stronger evidence of economic slowdown before approving further cuts.

    If mortgage rates hover around 6 %, Hale believes home sales will improve in 2026, as lower rates would offset price increases, especially if incomes continue to rise. She expects a noticeable uptick in sales from the recent 30‑year lows.