Mortgage rates have been slowly trending downward, and according to recent data from Freddie Mac, rates have decreased for four consecutive weeks. At the same time, the Federal Reserve has cut the federal funds rate for the second month in a row. These changes have sparked a major question for many Central Valley homeowners and potential buyers: Will mortgage rates continue to fall, and is now the right time to buy a home?
The answer is more complicated than it seems. While decreasing rates usually create excitement, the current housing landscape tells a different story.
Mortgage Rates Are Dropping, but the Market Has Not Fully Shifted
Lower rates tend to increase buyer confidence. Historically, falling rates lead to stronger demand and more movement in the housing market. But today, many homeowners are still holding onto the ultra-low interest rates they locked in from 2020 to 2022. These loans, often between 2 and 4 percent, are significantly lower than current options.
Because of this, homeowners are staying put. Inventory remains tight, supply continues to outweigh demand in many areas, and fewer people are motivated to sell even if rates dip.
This is leading to a slow-moving market where rates are improving, but availability and affordability remain limiting factors.
Will More Fed Rate Cuts Mean Lower Mortgage Rates?
Not necessarily. The Federal Reserve influences mortgage rates, but does not directly set them. Rate cuts often signal economic easing, which can help reduce borrowing costs over time. However, mortgage rates depend on:
- Inflation trends
- Investor demand for mortgage-backed securities
- Overall economic stability
- Housing supply and demand
Economists expect a series of rate cuts over the coming year, but the impact on mortgages will vary. Even with more cuts expected, buyers should not assume rates will immediately drop to early-pandemic levels.
This is a long-term adjustment, not an overnight shift.
Is Now a Good Time to Buy a House in the Central Valley?
For many people, the honest answer is no.
Even though rates are trending lower, timing still presents challenges:
- Inventory is limited
- Prices remain elevated
- Sellers have little motivation to move
- Many buyers feel stuck between high prices and moderate rate relief
- Households with historically low mortgage rates are not eager to transition to higher payments
The market has not realigned enough to create the ideal buying environment. Many buyers are choosing to wait until further rate cuts materialize and more homes become available.
Homeowners Are Stuck in Low-Rate Loans and Not Moving
This is one of the biggest factors shaping today’s market. Millions of homeowners refinanced or bought during historically low-rate periods. These loans created long-term affordability and stability that is difficult to give up.
Selling a home with a 2.75 percent mortgage to buy another home at 6 percent or higher does not make financial sense for most families. This has stalled movement, reduced housing turnover, and kept inventory tight across the Central Valley.
Until more significant rate reductions occur, this pressure will continue.
What Buyers and Homeowners Should Do Next
Even if now is not the perfect time to buy, there are smart steps to take while waiting for the market to shift.
Monitor rate changes monthly
Gradual rate drops may turn into stronger declines if market conditions continue improving.
Strengthen financial readiness
Updated credit, stronger savings, and pre-approval prep help buyers move quickly when the timing improves.
Watch local supply trends
Housing inventory varies by county and neighborhood. Central Valley supply numbers will be key indicators going into 2026.
Have a long-term strategy
Buying a home is not just about rate timing. It is about financial stability, job outlook, monthly affordability, and long-term fit.
Key Takeaways
Mortgage rates are decreasing, and further rate cuts are expected. However, the Central Valley housing market is not fully aligned with buyer interests yet. Demand remains soft, inventory remains limited, and many homeowners are staying in place due to their low-rate loans. While these improvements are promising, they do not necessarily mean this is the right moment to buy. The coming months will be key as rate cuts continue and supply slowly adjusts.
It’s important to stay informed and plan with expert guidance if you are considering buying or selling property. Contact DeMera DeMera Cameron to review how changing mortgage rates may impact your financial and tax strategy.