Interest Rate Cuts Could Drive RI’s Real Estate Prices Much Higher, Say Experts
GoLocalProv News Team
Interest Rate Cuts Could Drive RI’s Real Estate Prices Much Higher, Say Experts
Now, three top real estate experts in the state say the prices may increase significantly if the Federal Reserve cuts interest rates.
Chair of the Federal Reserve Jerome Powell said Friday, while signaling that the Fed may move forward with a rate cut, that there are risks that inflation will continue rising and that the labor market will keep weakening. “The balance of risks appears to be shifting,” Powell said. While labor markets appear to be stable, he said it "is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers.”
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Sally Lapides, President & CEO of Residential Properties, says, “The market is extremely uncertain right now because, on one hand, you have the labor market hurting a little bit, and that always argues for lowering the rates. On the other hand, we haven’t really seen the full impact of tariffs, and tariffs are inflationary, and that would raise rates, so it is a very difficult time to predict which of the two driving forces are going to predominate.”
She hopes the Fed moves forward with a rate cut in September, but warns that it will have some significant impacts on home prices.
“People will refinance their 7% mortgages, first-time buyers will be better able to qualify for a mortgage, which will unlock the market for second and third-time buyers. More people from out of town may come to Rhode Island to consider second homes. This will put pressure on prices going up if it spurs more activity, especially in the lower ranges,” added Lapides.
Rutley said a rate cut would impact three groups: first-time home buyers; those who are now buying could buy more; and existing homeowners who had not been active could jump into the market to buy up.
He said that if rates come down, the house that has 10 offers now will have 20 offers after a rate cut — pushing sale prices up.
Rhode Island real estate single-family home statistics for July 2025 show that the median asking price for new listings reached $529,000, while the median home price of sold listings reached $505,000, according to the monthly market report by Mott & Chace. The supply of inventory decreased from 2.8 months to 2.1 months when compared to the same time period last year.
Zachary Levesque, Regional Vice President Northeast for Northpointe, a leading mortgage company, said,” In Rhode Island, where housing inventory remains near historic lows, lower mortgage rates could have several implications. A decline in rates may further intensify demand, placing additional pressure on already limited inventory. However, the impact on property values is less clear-cut. If rate cuts are aggressive and prompt a significant increase in inventory, this could exert downward pressure on home prices.”
“Overall, the prospect of lower interest rates is welcome news for both buyers and sellers, who have been significantly affected by elevated mortgage rates over the past four years,” added Levesque.