Washington, DC, September 18, 2024 – The National Housing Conference’s (NHC) President and CEO David M. Dworkin released the following statement in response to the decision of the Federal Reserve Board of Governors Federal Open Markets Committee to lower the Federal Funds Rate.
“The Federal Reserve’s (Fed) recent rate cut is set to have far-reaching implications for the U.S. housing market, potentially alleviating affordability concerns and stimulating inventory growth.
First-time homebuyers stand to benefit significantly from the rate reduction. For every 1 percentage point decrease in mortgage rates, buyers of a median-priced home ($412,000 with 5% down) could save approximately $250 per month on their mortgage payments.
The rate cut may also unlock a stagnant housing supply. Currently, over 76% of mortgage holders have rates below 5%, with 57% enjoying rates under 4%. These “locked in” homeowners have not been able to afford to sell their homes because of the cost of a new mortgage. As rates move down, more of them will be able to justify selling their homes. In addition to the shortage of new housing, the lack of existing inventory has increased home prices.
A reduction in mortgage rates could potentially contribute to lowering inflation, aiding the Fed’s efforts to reach its 2% target from the current 2.5%. The Department of Labor reported that shelter costs were the main factor in recent inflation figures.
NHC commends the Fed’s action and looks forward to additional rate cuts as the economy continues its successful soft landing, providing desperately needed relief to the housing market.”
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About the National Housing Conference (NHC): Founded in 1931, the National Housing Conference is the oldest and broadest housing coalition in America. NHC is a diverse continuum of affordable housing stakeholders who convene and collaborate through dialogue, advocacy, research, and education, to develop equitable solutions that serve our common interest—an America where everyone is able to live in a quality, affordable home in a thriving community. Politically diverse and nonpartisan, NHC is a 501(c)3 nonprofit organization. To learn more about NHC, visit www.nhc.org.