Housing inventory in Decatur is low as interest rates drop

DECATUR, Ill. (WAND) — The average interest rate on a 30-year mortgage nationwide fell to 6.2% last week, its lowest in 19 months. While the drop means sellers might be more motivated, it's still above the mortgage rates many home owners got during the pandemic.

"Back in COVID and in the early 2020s the rates dipped down to about 2.65%, I think was the lowest," said Tom Brinkoetter, Designated Managing Broker and Owner of Brinkoetter Realtors. "So you have homeowners that own their home now that are in an interest rate of 2.6 to 3% and rates are now 6%. That gap keeps people from selling their home."

Brinkoetter explained that some home owners are holding off on selling their homes because they would rather wait until the interest rates are more comparable with what they already have. This is causing a supply and demand issue in central Illinois.

"In the Macon County area, there's 135 homes actively being marketed for sale ... that is very, very low," said Brinkoetter. "We still have a decent amount of demand in certain price ranges, but there's very, very little inventory."

Brinkoetter said the housing market hasn't had a chance to equalize since the pandemic. These interest rates are all relative, as historically, interest rates of 6-7% are relatively low. These rates are likely to stay in the low six percent rage, but Brinkoetter believes they will need to dip more to fix supply and demand concerns.

"I do think that we're going to need to see rates get below 6% before we see any significant increases in inventory," said Brinkoetter. "It's just hard when you have a 3% gap, it keeps some people from listing their home."

The Federal Reserve is expected to cut their benchmark interest rate tomorrow. Right now, it is the highest it's been in 23 years. That change could also pull down mortgage interest rates.