Now may be a smart time to be a homebuyer in the Charlotte area. Here’s why

It may be a promising time to be a potential homebuyer in the Charlotte area.

While initial home prices have increased, price reductions are more common and inventory is up, though still tight, according to the Canopy Realtor Association’s monthly market report. And with the Federal Reserve ’s reduced interest rates sparking a potential decrease in mortgage rates , it’s looking good for potential buyers .

“When the Fed rate is lower, historically, we usually see lower mortgage rates associated with it and more buying power for the consumer,” said Larry Fiore, the regional sales manager of retail home lending at U.S. Bank in the Charlotte region.

Fiore said the Fed’s rate cuts can also influence other aspects of a potential buyer’s life, such as lower rates on credit cards or car loans, leading to more “liquidity and fluidity of funds.”

August housing market dive

In Canopy’s monthly report, one of the biggest takeaways was that home price reductions were up 61% across the Charlotte region during the first eight months of the year. This means homeowners increasingly reduced initial sale prices. Price reductions rose to 86% in August compared to August 2023, “which means buyers have increasing leverage,” according to the report.

Inventory also increased, with an addition of a little more than 9,000 houses to the Charlotte area market. Supply rose 52.9% year-over-year, the report adds.

Home prices in general are steady compared to July, according to the report, with median sales prices down less than a percent (0.7%) and average sales down 1.8%. But year-to-year, sales prices have increased with the median sales price hitting $399,000, a 3.6% increase, and the average sale price rising to $501,320, or a 5.8% increase.

Home sales were down across the 16-county region, decreasing by 8.3% year over year. A little more than 3,700 homes sold in August, 336 homes fewer than August 2023. The report adds that month-over-month sales were also down 3.4%, noting that buyers are waiting for lower mortgage rates.

In Mecklenburg County specifically, home sales were down 6.2% year-over-year and in Charlotte sales were down 10.3%.

What does the Federal Reserve rate cut really mean for homebuyers?

The Federal Reserve is the central bank for the U.S. and its main goal is economic stability . In extremely simple terms, when things are looking up financially, the Fed tends to increase interest rates to slow economic growth and when things are looking bad, it decreases interest rates for a needed boost.

During the height of the COVID pandemic in early 2020, the interest rate was at a historically low range of 0% to .25%, one that hasn’t been seen since the Great Recession in 2008.

But in 2022, the rate began to increase. It hit a high range of 5.25% to 5.50% in July 2023, a first since 2006. The high rate made loans more expensive to take out and increased inflation.

In early September, the Fed cut the federal fund rate by half a percentage point, bringing the rate into a 4.75 % to 5% range. It’s the first cut the Fed has made since March 2020.

Fiore explains that the rate cut doesn’t directly impact mortgage rates but it influences them. And yes, the cut is influencing a decrease in mortgage rates.

Interest rates in North Carolina as of Wednesday are about 6.32% for a 30-year fixed rate mortgage, according to Bankrate, a personal finance company. The rate was around 6.5% in August.

And according to real estate agency RealtyHop , the decreased rates means, on average, a homeowner could save about $104 a month in mortgage payments.

Bankrate adds that mortgage rates may continue to fall through the end of the year, perhaps landing at under 6%.

However, Canopy cautions that continuing to wait for rates to fall further may result in more buyer competition.

Ultimately, Fiore says if a person is interested in buying a home, it is a good time. He adds that folks should reach out to loan officers for any assistance, whether that be financial options or just advice.

“I think it’s a great time to look in Charlotte. I think Charlotte has a ton to offer,” Fiore said. “I think there’s a lot of availability of homes, from starter homes up to very elaborate homes.”