The Federal Reserve has finally adjusted interest rates downward for the first time since March 2020, with a 50 point drop last month.

Here is an interesting article detailing the history of rate changes since 1990.

After 4.5 year spent tackling the inflation resulting from the pandemic, the Fed finally feels that interest is close enough to their target goal of 2% to make a downward adjustment.

However, this drop did not correspond with the drop in mortgage rates that many were hoping for. While these two rates often correlate, correlation does not equal causation. In fact, bond market brokers will often price in potential rate cuts before they happen, leading to an interesting scenario where mortgage rates are more reliant on expectations of what the Fed will do, rather than their actual actions.

Here is an article with some predictions.

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Available housing inventory is still recovering from the pandemic as well, as you can see in the below chart. 2017-2019 displayed consistent levels, then the sharp drop of 2020, and each year since has trended at much lower levels. 2024 has been a much stronger year than 2023 with a 34% increase at this point in time. Inventory has finally returned to the levels we saw in early 2020 before the drop-off!

Locally, inventory remains near the low point hit in 2022. Naperville has just above 1 month of supply (that is, the amount of time it would take to sell through current inventory at the current rate of sale, if no new homes were to list.) Anything below 6 months is considered a seller’s market. Just for some historical perspective, we got close to a full year’s supply back in 2008 and 2009: