North Texas buyers, sellers get off the fence following recent Fed rate cuts 

Is the local housing market getting off high center following the recent Federal Reserve rate cut? 

Real estate professionals and homebuilders say they are seeing indications that buyers and sellers are getting back into the market. However, they caution that any change will be slow due to high mortgage and interest rates that tamped down demand and hampered the supply of both new and pre-owned homes. 

“I’m seeing more people getting off the fence,” said Laura Beyer Cook, a Realtor with Burt Ladner Real Estate and a board member at the Greater Fort Worth Association of Realtors. “The opportunities are starting to come back around to where people feel more comfortable both buying and selling.” 

On the buyers side, Cook said that the lower mortgage rates have potential buyers more inclined to search for homes and commit if they find something they like in their price range. But it helps on the seller side as well, she said. 

“There are a lot of sellers who bought when rates were so extremely low, they took advantage of it,” she said. “But now they are kind of upside down because they can’t get out of their homes and sell and don’t want to then get locked into a higher interest rate.” 

With more sellers on the market, more homes are available for buyers, Cook said, which makes prices more competitive and increases inventory. 

Fort Worth had 4.1 months of housing inventory in August, up from 3 to 7 months a year earlier, according to the Greater Fort Worth Association of Realtors. A healthy rate is 3 to 4 months, according to the Texas Real Estate Research Center at Texas A&M University. 

“Having more inventory allows families to upgrade their homes and leaves room for first-time homebuyers to enter the market with a bit more negotiating power,” said Paul Epperley, president of the local Realtor association and a Realtor at Hallowed Homes. 

Fed moves

On Sept. 17, after months of speculation and intense pressure by President Donald Trump, Federal Reserve Chair Jerome Powell announced the central bank would cut interest rates by 25 basis points. The federal funds rate is now in the 4% to 4.25% range. It’s the first rate cut by the central bank this year.

The interest rate cut was closely watched in the housing industry, particularly in this area as new residents flock to North Texas because of the strong economy. But the housing market has not kept up with demand, and the increase in mortgage rates made it even more difficult, said Ben Hart, chief financial officer of Texans Credit Union. 

“Some would say that a lot of the mortgage rates had already priced in this 25 basis point cut,” he said. “I’m not sure the Fed rate-cuts news will change much of anything, but it is a good indication of where things are going.” 

Mortgage rates aren’t tied directly to the short-term federal funds rate, which the Federal Reserve sets at its policy meetings, Hart said. They are linked to activity in the 10-year U.S. Treasury market, which serves as the benchmark for mortgages and other long-term rates.

Those rates had already fallen before the Fed meeting, he said. 

The average 30-year fixed-rate mortgage soared to 7% and above through much of January and had been as high as 6.89% in late May, according to data from Freddie Mac’s primary mortgage market survey.

Rates had fallen prior to the Fed meeting with the 30-year fixed mortgage interest rate averaging 6.27% as of Sept. 26, down from 6.39% the prior week, according to Bankrate.com.

To combat some of those rate fluctuations and the hesitancy it can cause for first-time homebuyers, Texans Credit Union began a program that offered low down payment mortgages requiring as little as 3% down. 

“We wanted to try to get more of those first-time buyers into the market, which can be pretty confusing for them right now,” he said. 

But no matter the drop in mortgage rates, that won’t help homebuyers if there are no homes on the market, said David Quigley, clinical assistant professor of economics at the University of Texas at Arlington.

“A rate cut may make things more affordable,” he said. “But there are still supply issues, particularly in North Texas.”

Quigley said the lower interest rates should spur some homebuilding, but that will take time. 

For Mike Garabedian, a custom homebuilder and owner of Garabedian Properties in Southlake, the rate cut helped create some business and gave him more latitude in building. 

“The phone started ringing. The lower rate is increasing demand for my homes in the under $2 million area,” he said. 

Lower interest rates mean more homebuilders in North Texas can get closer to meeting the demand. 

“A slow rate cut is probably best,” he said. “If the rate were cut too much and demand increased too much, we’d just see the supply of goods, such as lumber, and workers get stretched, and we’d get inflation.” 

For UTA’s Quigley, the Fed signaling of future rate cuts could mean flexibility in the local housing market that it hasn’t had for several years. 

“They are saying to expect future cuts, and that could ease things here in terms of housing, but it will be a slow process,” he said. “There are a lot of people moving here.” 

Bob Francis is business editor for the Fort Worth Report. Contact him at bob.francis@fortworthreport.org.
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