Breaking: Fed Rate Cuts Incoming

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News Flash

The Fed's About to Make Everyone's Day

Markets are pricing in a rate cut by the Fed at Wednesday's September 17 meeting. Experts are treating it as a virtual certainty.

This would mark the first rate reduction since 2024, driven primarily by growing concerns over a slowing labor market. Wells Fargo Securities points to the "precarious state of the job market" as the key factor pushing the Fed toward this move.

The FOMC is also signaling potential additional cuts later this year—a complete 180 from 2024's rate-hiking stance.

For borrowers, this could mean relief from high-interest charges. But before you start celebrating, remember: mortgage rates don't automatically follow Fed moves. They're more closely tied to 10-year Treasury yields.

That said, the expected Fed cut has already influenced a decline in mortgage rates. Homebuyers considering purchases now can always refinance later if rates drop further—giving you some flexibility in this shifting landscape.

Fixed income markets are already pricing in not just the initial cut, but a sequence of rate reductions.

Commercial Real Estate Hits the Pause Button (Again)

71% of commercial real estate investors are sitting on their hands right now. That's not speculation—that's the reality of Q2 2025's CRE market.

Transaction volumes? Well below historical averages. Deal activity? Practically frozen. The culprit behind this historic standstill isn't mysterious—it's a perfect storm of Federal Reserve policy uncertainty, interest rate volatility, and broader economic jitters.

Here's what's happening: Buyers and sellers are both playing chicken, waiting for clearer signals from monetary policymakers. The high cost of capital from previous quarters, combined with constantly shifting economic forecasts, has created an environment where major transactions feel more like gambling than investing.

The numbers don't lie. Recent labor market data revisions have only added fuel to the uncertainty fire, making CRE investors extremely cautious about valuations and deal timing. When you're dealing with seven-figure transactions, patience suddenly becomes a virtue.

Sources: [Source], [Source], [Source], [Source], [Source]

More You Should Know

• FinCEN's New Real Estate Rule: FinCEN's new Residential Real Estate Reporting Rule, effective December 1, 2025, mandates that title companies and real estate attorneys report non-financed residential transactions involving legal entities or trusts nationwide, a significant expansion from prior Geographic Targeting Orders. [Source]

• Construction Faces Headwinds: The construction industry navigates mid-2025 headwinds including high interest rates, policy uncertainty, and labor shortages, which are particularly impacting nonresidential projects and contribute to elevated input costs. [Source]

• Title Insurance Adopts AI: The title insurance industry is actively integrating artificial intelligence to enhance efficiency, reduce costs, and strengthen fraud prevention measures, aligning with broader trends of AI adoption across the insurance sector. [Source]

• Rates Hit 11-Month Low: Mortgage rates reached an 11-month low of 6.35%, driving a surge in applications as the Federal Reserve's impending rate cut offers significant relief to potential homebuyers. [Source]

• Insurance Hikes Drive Housing Costs: Property insurance payments have surged by nearly 70% over the past five and a half years, now representing 9.6% of average monthly mortgage-related expenses and significantly outpacing other housing cost increases. [Source]

• Housing Market Shows Regional Divide: The national housing market is balanced at five months of supply, but regional disparities exist. Seven of the 50 largest metros favor buyers, while 20 remain strong seller's markets. [Source]

• New Tax Law Boosts Real Estate: The recently enacted tax legislation provides significant advantages for the real estate industry by permanently restoring 100% bonus depreciation, introducing a new elective depreciation allowance for qualified production property, raising the REIT subsidiary asset test limit, and permitting completed contract accounting for residential condominium projects. [Source]

• Home Prices See Annual Drop: For the first time since spring 2025, national median list prices have fallen 0.9% year-over-year, alongside a decline in price per square foot, indicating that persistent affordability challenges and elevated unemployment are finally compelling sellers to temper their expectations. [Source]

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