The Federal Reserve lowered its benchmark interest rate by 25 basis points on September 17th, marking the first rate cut since December 2024.
The decision brings the federal funds target range down and signals a shift toward easing as the economy shows signs of strain. Fed Chair Jerome Powell described the decision as a “risk management cut,” citing rising unemployment while acknowledging that inflation remains elevated.
Markets had largely priced in the decision in advance. Mortgage rates, which have been falling steadily over the past month, reached their lowest levels since late 2022 ahead of the announcement.
Updated projections show that most Fed policymakers now expect two additional 25-basis-point cuts by the end of the year, which would bring the federal funds range to 3.5%–3.75%. Analysts broadly agree, with most forecasting two or three cuts in total by December and additional easing in 2026 if growth continues to soften.
The decision was well received by housing industry groups. Robert Dietz, chief economist for the National Association of Home Builders, said the cut will have a “direct, beneficial effect” on interest rates for acquisition, development, and construction loans. Lower lending costs, he added, should help unlock more attainable housing supply across a constrained market.
For short-term rental investors, the shift is likely to improve borrowing conditions, reduce debt service costs, and support new investment activity.
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