Last week, the Federal Reserve lowered interest rates by a quarter percentage point in the first rate cut of the year.
Economists believe this is partially due to signs of a weakening labor market.
“I think they’re starting to see that there’s more of a risk on the unemployment and employment side of things,” said Thomas Stockwell, assistant professor of economics at the University of Tampa.
WATCH: Housing market expected to start moving again with interest rate cuts
The lower interest rates are expected to have an effect on Tampa Bay’s housing market.
This year, there’s been an increase in inventory on the market.
“This year has really been a year of correction in the market,” said Tiffany Michael, real estate agent with Century 21 Circle.
Houses have been staying on the market about triple the amount of time than they used to.
“So maybe 60-90 days on the market for some of the kind of suburb and outlying areas... The quantity of buyers is down about 45% from last year,” said Michael.
She’s also seen incremental decreases in prices of about 5-10%.
“This really needed to happen. We’ve been in a couple of years of stagnation where sales weren’t maybe happening as frequently and in as high numbers as they could’ve been,” said Michael.
Now with the lower interest rates, she believes it will create a better situation for buyers and sellers in the coming months.
“So many buyers have been outpriced with overall purchase pricing as well as the month-over-month mortgage pricing. And those things have really halted a lot of buyers,” said Michael.
A drop in interest rates statistically means an uptick in buyers is on the horizon.
“Now we’re starting to see it come back, maybe to a more realistic level,” said Michael.
The rate cut could eventually mean big things for buyers.
“It just means hundreds of dollars off of the mortgage estimate per month on your mortgage for the same price on the same home you were looking at just last month," said Michael.
With more prospective buyers, of course means good news for sellers.
“We still have a really healthy number of sales turning over,” said Michael
Some economists predict the Federal Reserve will cut interest rates two or three more times before the end of the year.
“At the end of the day, the Federal Reserve is trying to balance both inflation and unemployment, and if they see the risks to unemployment starting to become a bigger issue, then the way to fight that is by cutting rates,” said Stockwell.
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