Favorable Fed Meeting: A Positive Signal for Buyers and Sellers

This week’s Federal Reserve meeting brought no major surprises, but its tone and actions were modestly favorable for mortgage markets. Combined with consumer spending data that closely matched expectations, the result was a slight drop in mortgage rates by the end of the week.

Fed Holds Steady, Signals Rate Cuts Remain on Track

As expected, the Federal Reserve left the federal funds rate unchanged at a target range of 4.25 to 4.50 percent. Officials acknowledged that the current level of economic uncertainty is "unusually elevated" and emphasized the importance of waiting to see the effects of recent policy shifts before making further changes. The updated dot plot showed that the Fed still expects two rate cuts in 2025 and two more in 2026. Additionally, the Fed will slow the pace of reducing its Treasury holdings, while continuing to reduce its mortgage-backed securities at the same rate. For real estate, the Fed’s commitment to future rate cuts—even with a higher inflation outlook—helps reassure mortgage markets and keeps borrowing costs from rising further. Buyers may benefit from improved affordability as rates ease, while sellers can expect increased buyer confidence heading into the spring market.

Consumer Spending Rebounds After January Dip

Retail sales in February rose 0.2 percent from January and were 3.1 percent higher than a year ago. Spending was strong in personal care and online categories, while bars and restaurants saw softer numbers. Although the rebound was welcome, some investors remain cautious, wondering whether consumer spending will slow in the months ahead due to economic uncertainty and ongoing tariff developments. For the housing market, stable consumer spending is a sign that buyers still feel confident, which supports continued demand. Sellers may benefit from steady buyer interest, though keeping an eye on broader economic trends will be important.

Import Prices Rise Ahead of Tariff Impact

Import prices rose 0.4 percent in February, beating expectations and driven in part by increased costs for consumer goods. Since import prices are recorded before tariffs are applied, this data is drawing more attention from investors. A key question going forward is whether exporters will reduce their prices to absorb the cost of tariffs or if U.S. buyers—including households and businesses—will end up paying more. For real estate, higher import prices could eventually push up the cost of building materials and home goods. Buyers and sellers should both consider how these trends might affect construction costs, renovation budgets, and the broader affordability landscape.

What This Means for Real Estate

The Federal Reserve’s steady hand and commitment to gradual rate cuts provide a sense of stability for mortgage markets. For buyers, this may be a good time to act while rates are trending lower and before potential cost increases tied to tariffs or inflation take hold. Sellers should feel encouraged by growing buyer confidence but may want to stay flexible in case economic uncertainty leads to shifts in demand.

Staying on top of interest rate policy, spending trends, and trade developments is essential for making smart real estate decisions. Whether you are buying or selling, a well-informed approach will help you move confidently in today’s market.