Domino effect: How the Fed’s interest rate cut impacts Phoenix home prices

With the Federal Reserve cutting the benchmark federal funds rate by half a percentage point to the 4.75%-5% range, Arizona’s residential real estate brokers are seeing renewed homebuyer activity.

Right after the Fed’s rate cut, Greg Hague, CEO of Scottsdale-based 72Sold, said he saw an immediate surge of buyer inquiries.

They wanted to know if they could get a mortgage loan below 6% and were wondering whether they should buy now or wait for more interest rate cuts, he said.

“Unfortunately, for many of these hopeful buyers, rates have slightly increased instead of dropping as expected,” Hague said.

Not only did rates increase, but home prices are still on the rise.

“Any time you have a rate cut, buyers on the sidelines who were waiting start to actively jump back into the market,” said Frank DiMaggio, a broker and co-founder of MDF Development, a Scottsdale-based developer of luxury homes.

That means more competition for existing inventory, which triggers price increases, he said.

This story is posted in partnership with Phoenix Business Journal. Click to read the full story.