INDIANAPOLIS (WISH) — The Federal Reserve cut interest rates in September by a half-percentage-point. However, mortgage rates did not drop at the same rate.

Mortgage rates are influenced by, but not tied to, the federal rate, according to new data from F.C. Tucker’s latest housing market report.

Dan Brown, a realtor with FC Tucker, joined “Daybreak” on Tuesday for the monthly Real Estate Rundown, where he broke down the September report.

Interest Rates

“The home mortgages are actually tied to a different part of the bond market. So, they have come down, and then they went up a little bit. But those are moderate changes that are kind of normal. I think most of the experts I talked to still believe that we’re trending down and that we will continue to trend down through the end of the year and into the spring.”

Mortgage rates are sitting just above 6% and Brown says they are still expected to trend downward into next year.

“My point is they’re going to be right around 6%, which is not 8%, which is what it was this time last year.”

Prices

“Prices actually dropped a little bit last month. Normally, in the fall, we slow down a little bit. It’s kind of normal. It’s still a very strong selling season, but we were off about 3% in prices that came down and the units were down about 3%. So that was not a great month. It was kind of average, but we expected them to go up. So the fact that they moderated is telling and that affects affordability.”

Brown says current buyers pulled back a bit, which brought sales prices and total homes down from August, but they are still ahead for the year.

Payment for buyers

With relatively flat prices and lower rates the average mortgage payment is $280 lower a month than in June in Indiana, according to Brown.

“Since June, it’s gotten $280 cheaper to buy a house, which is very good. And it’s significant.”

Inventory

Selection also improved for buyers, with over 5,800 homes for sale in our market. Brown says that the most since December of 2019.

“We are almost to 6,000 houses and that’s significant because it allows buyers so many much more options…and it’s not really affecting the sellers as much. I mean, it is taking a few more days to sell a house. They’re not going as quickly as they did during the crazy period, but they’re still selling at a pretty decent clip. But we are approaching a little bit more balanced market for both buyers and sellers.”

As sellers faced more competition and cautious buyers, Brown says their homes took 20% longer to sell in September and they received about 3.5% less than their original list price. 

Advice

“I think a lot of people are kind of anticipating a reduction in rates and that’s great, but you might not win if the prices go up. So I think if you’re in the market as a buyer, this is a great time to start looking. Waiting until the spring — you’re going to have a lot of people waiting with you.”

Brown believes all those sellers are about to become buyers.

“People sell before they buy and in Indiana, we don’t have a lot of people migrating in and out. We buy and sell to each other, so those sellers are about to become buyers. I think that’s going to indicate a pretty active spring and my advice is be prepared and watch. Watch your money, but get out there and make something happen soon.”

Watch the full interview above for October’s Real Estate Rundown.