Dismal job numbers over the summer were the catalyst for the Federal Reserve making a modest quarter-point cut in the Fed rate at the Sept. 17 FOMC meeting, a welcome announcement for the real estate industry, which has struggled with lagging sales and refinance activity in 2025.

While the rate cut was less than some hoped for, anticipation of a rate cut had already set the mortgage markets humming, with the Mortgage Bankers Association noting a strong uptick in mortgage applications and refinance applications for the week ending Sept. 12.

Here’s the data:

• The Market Composite Index increased 29.7% on a seasonally adjusted basis from one week earlier.
• The Refinance Index increased 58%
• Refis were a whopping 70% YOY
• The Purchase Index increased 3% and was 20% higher YOY

In responding to the FOMC rate cut announcement,  MBA SVP and Chief Economist Mike Fratantoni noted that the cut was in line with market expectations.

“The projections show that the median FOMC member anticipates two additional cuts in 2025 and one more in 2026, with the expectation that the job market will remain soft while inflation, while rising, won’t move too far before returning to the Fed’s 2% target. The strong vote for the 25-basis-point cut suggests that members, while acknowledging that downside risks to the job market have increased, are not panicking about the state of the economy.”

Fed Chair Jerome Powell was cautiously optimistic about the economy, pointing to strong fundamentals despite slow job growth and the recent uptick in inflation from 2.7% to 2.9%, which he attributed to a temporary boost due to the tariff situation.

In fact, the FOMC group’s outlook envisions an economy staying the course for the next few years, with GDP forecasted to stay below 2% for the next several years and the unemployment rate expected to reach 4.5% by years end, but then moderate to 4.2% over the long run. Inflation is forecasted to reach 3% by year’s end, then moderate over the next few years into the 2-2.5% range.

Despite the cautious optimism, Powell did acknowledge that this is a challenging time for economic forecasters, largely due to economic and political volatility that creates greater uncertainty. As a result, he said the FOMC is in a “meeting-by-meeting situation” as they keep a close eye on inflation and job numbers.

This uncertainty is playing out on the consumer side as well, and while more rate cuts could encourage greater participation in the real estate market, consumer outlook will be key in fueling the market in 2026.

The Federal Reserve Bank of New York’s Center for Microeconomic Data’s August 2025 Survey of Consumer Expectations showed that unemployment and job loss expectations worsened, with job finding expectations declining to a series low. The survey was fielded from August 1 through August 31, 2025.

This tracks what is happening on the ground. While there has not been a noticeable uptick in layoffs, there is a decided slowdown in hiring, which is feeding the perception that jobs will not be readily available should an employee decide to move on or is released.

At FAN, we are ready to meet the growing needs of a more active season ahead in Florida as lower interest rates open up the possibility for more buyers and sellers to enter the market. Contact us today to learn how we can help you with your next transaction.