Will the anticipated 3 rate cuts jump-start residential home sales this year?

they're way late on these cuts

this is affecting much more than home sales

commercial real estate investors can't wait for the rate cuts

Maybe I'm just an economic dumbass, but it seems like, in modern market history, mortgage rates and home prices seem to roughly balance each other out, when it comes to total monthly payment.

My parents bought a starter home in the early 80s at something like 13%. Now they are multimillionares.

No rate cuts, and there likely shouldn't be.

I for one hope rates stay the same or even nudge higher. I’m finally getting some return on my cash. Rates should have never been allowed to drop as low as they did.

It certainly will

I have talked to several agents who are confirming what I suspect

Buyers are just sitting back and waiting for the rates to drop

I wouldn’t expect any rate cuts until inflation is under control. Rate cuts drive capital investment and residential home construction, and drive up the prices of anything financed, which are primary contributors to inflation.

The decrease in residential home sales is a feature, not a bug.

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Will the anticipated 3 rate cuts jump-start residential home sales this year?

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Home sales have already been increasing.

New home sales have been on the rise since November.

Existing home sales have been increasing since December.

Median sale price essentially stalled in 2023. That's a quarterly read, so if the numbers of sales of new and existing homes are rising, it's a safe bet that median sales price for Q1 is going to be "coming in hotter than expected" (which is what they've said about CPI multiple times already this year).

There seems to be an assimilation effect taking place where consumers are getting used to the current interest rates as being the new norm so they are returning to house-shopping. If this is a solid read, then even a single cut to rates right now would cause sales (and then prices) to skyrocket.

Rates aren't cut because an economy is doing well, they are cut because an economy is starting to do poorly (whether just a slowdown in GDP or a massive recession).

Inflation is starting to creep back up (both CPI and PPI). If CPI were measured correctly (like no more OER and weighting the basket of goods on propensity of being purchased), it would likely be closer to 4% right now than 3%.

Job creation is still (allegedly) strong and while Unemployment has moved up slightly, both Initial and Continued Unemployment Claims continue to remain flat.

All of that equates to there not only being no reason to cut rates right now, but that cutting rates would push inflation back up.

It's a safe bet that rates will remain paused until at least June (right now, my thinking is September, but there's still a lot of time between now and then). This means that, at best, three cuts would have be crammed within six months. Making 3 cuts of any amount in 6 months means your economy is struggling.

That said, there will likely not be three cuts this year. It will take an economic miracle or a lot of lying just to get one cut before the end of the year.

With inflation moving back up, we need at least another hike (we should have had one at the end of last year, but JPow finally blinked in his staredown with Wall Street).

No

75% for a June cut

We will see PCE next week