The Federal Reserve enacted its first interest rate cut since the pandemic on September 18, 2024, slashing half a percentage point off benchmark rates—from 5.25% to 5.5% down to 4.75% to 5%
This rate cut is the Fed’s first since 2020, but it won’t be the last. On average, members of the Fed’s rate-setting committee expect borrowing costs to drop by another half-percentage point this year and an additional full point next year. That plan would reduce the key rate to about 2.9% by the end of 2026.
Here’s how the cut in interest rates is expected to affect the real estate market.
Key Takeaways
- Lower interest rates make mortgage payments more affordable, attracting buyers who were previously hesitant due to high borrowing costs, especially first-time homebuyers.
- The rate cut stimulates market activity, resulting in more transactions. This surge provides new brokers ample opportunities to build their client base and gain experience quickly.
- Increased demand typically drives home values up, leading to higher potential commissions for real estate brokers. Thus, it is an attractive time to enter the field.
- With favorable market conditions and growing inventory, it’s a prime moment to pursue a real estate career. Prospective brokers can start earning commissions quickly after meeting licensing requirements.
How the Interest Rate Cut Will Affect the Real Estate Industry
Historically, interest rate cuts have increased buyer demand, leading to more transactions and higher home values.
Lower interest rates lead to increased buyer demand.
Buyers who were previously hesitant to enter the housing market due to high borrowing costs are expected to return following the interest rate cuts, creating a resurgence in demand.
In August 2024, the number of homes sold was down 5.7% year over year, and the national average 30-year fixed-rate mortgage rate was 6.5%.
However, the new rate range is between 4.75% and 5%, making monthly mortgage payments more manageable for buyers—especially first-time homebuyers who may have been waiting on the sidelines.
With the additional demand, home values are expected to increase.
In August 2024, the median home price in North Carolina was $381,300. However, as demand increases, home values often rise. This increased demand will affect more than just the largest or historically most expensive housing markets.
How Interest Rate Cuts Affect the Real Estate Industry
Increased market activity and home prices mean it’s a good time to become a real estate broker. More volume and higher prices will lead to larger commissions for real estate brokers, making it a financially attractive time to enter the field.
Additionally, this increased activity means more opportunities for new brokers to gain experience and build their client base. It’s an excellent environment for learning and growing your skills quickly.
“Now is the time to start a real estate career,” said Tina Lapp, head of customer experience, instruction & operations for Colibri Real Estate. “As interest rates become more favorable and we are starting to see more inventory in most markets, we will see an increase in real estate activity. Those buyers and sellers are looking for real estate professionals to help them through the process more than ever before.”
It’s important to note that to become a real estate broker in North Carolina, you must earn a license by completing the following steps:
- Complete a pre-licensing class
- Pass a licensing exam
- Fill out an application
- Pass a background check
You don’t need a college degree to become a real estate broker, and you can begin earning commissions as soon as you earn your license.
Start the licensing process today by enrolling in a self-paced pre-licensing course with Superior School of Real Estate. Our affordable pre-licensing packages and test prep materials are expertly designed to help you earn your license as fast as possible.
Financing is available! Questions? Contact a member of our team today!
