If you've been dreaming of building your perfect custom home, the recent news that the Federal Reserve lowered interest rates by 1/2 percentage point might have you considering if now is the right time to turn your dream into reality. Following the previous drop in mortgage rates that occurred in August, rates are solidly trending in a direction that is favorable for prospective homebuyers.
The housing market in recent years has been characterized by high interest rates and rising home prices, which has made many potential homebuyers cautious about when to start building. However, the recent market changes and projections suggest that now is an excellent time to begin the process of building your dream home. Here’s why:
Lower Interest Rates Mean Lower Costs
On September 18, the Federal Reserve announced a significant cut of ½ percentage point to the federal funds rate, lowering the target range to 4.75%-5%. This marks the first interest rate reduction in more than four years.
What does this mean for homebuyers? Mortgage interest rates had already started dropping last month in anticipation of a Federal Reserve rate cut, and they continue to decrease in response to this news. As of September 25, the average interest rate for a 30-year fixed mortgage has fallen to 6.18%, the lowest level since early 2023.
This is great news for anyone looking to borrow money to build a home - lower interest rates can significantly reduce the overall cost of building your home. Lower rates mean smaller monthly payments and savings on interest over the life of your loan, helping your budget go further and increasing your overall savings.
The Cost of Building Materials is Dropping
Another sign that it’s a great time to build a home is the continued drop in building material costs over the last several months. This reduction allows your budget to go further, enabling you to use higher-quality materials or add more features without stretching your finances. The combination of lower interest rates and reduced material costs offers a unique opportunity to maximize the value of your investment.
The Future Looks Promising
The half-point interest rate drop was larger than the expected quarter point drop, and all indications point to this trend continuing throughout 2024. Based on current Fed projections, experts predict that we may see two more interest rate cuts this year.
The goal of lowered interest rates is to manage inflation and stimulate the economy, and mortgage rates tend to fall along with the federal rates. However, mortgage rate drops are never guaranteed. By acting now, you can take advantage of the current favorable conditions and avoid the uncertainty of future market fluctuations.
Why Build a Home With Wausau Homes?
Building your dream home is a significant investment, and the right financial conditions can make it more attainable. With costs trending downward, now is an ideal time to consult with a builder, explore your options, and start the process of creating a home that reflects your lifestyle and aspirations.
At Wausau Homes, we are here to guide you through every step of the home-building process, ensuring it’s as smooth and enjoyable as possible. Contact us today to learn how we can help you build a custom home on schedule, with a firm price, tailored to your unique needs.
Note: This post was originally published in August 2024 and has been updated to reflect the most recent developments and data.