A Fed rate hike could test housing’s new ‘rate normal’

Heading into 2026, some were predicting the Federal Reserve would make at least one rate cut if not more. Nine months into the year and so far the Fed has held steady on rates, but that is expected to change on Wednesday, with economists predicting a 25-basis point increase. “The Federal Reserve heads into its September meeting widely expected to raise rates,” Sam Williamson, First American’s senior economist said in a statement on Monday. “Stronger August job growth and firmer inflation have sharply increased the pressure to act, while Treasury yields and mortgage rates have climbed as markets price a more restrictive policy path.” Higher rates hit the market In the Reno, Nevada housing market, if the Fed does as predicted and mortgage rates also rise, Beau Keenan, the broker-owner of Dickson Realty, expects to see buyers showing greater reluctance to enter the market. “Historically, rates are not that high, but we are also at the highest prices ever seen in many markets, so having rates this high on top of record high prices, we noticed that just going from a 6.75% rate to a 7% rate, it takes out a swath of buyers,” Keenan said. “Every quarter percent does that, so I think we may...