On Wednesday, September 16, the Federal Reserve raised its benchmark interest rate by 25 basis points, to a target range of 3.75%–4%. The unanimous vote was the Feds first rate hike since July ‘23, and officials' projections point to one more increase before the end of the year.

Mortgage rates responded quickly. According to Freddie Mac's Primary Mortgage Market Survey, the average 30-year fixed rate hit 6.95% on September 17. That's up from 6.76% the week before and 6.26% a year ago, and it's the highest since Jan 2025.

I'm Bonnie Palmer, a Compass agent who grew up in Westlake and has helped clients buy, sell, and lease across Austin since 2014. Here's the plain-language version of what this means for you.

Why a Fed hike moves mortgage rates

The Fed doesn't set mortgage rates directly. It sets the short-term rate banks charge each other. Mortgage rates track the bond market, especially the 10-year Treasury yield. When the Fed signals it's serious about fighting inflation, bond markets react, and mortgage rates tend to move with them.

7% may be the new norm

If you're a home buyer waiting for rates to fall, it may be time to rethink your timeline. According to NAR (Nat. Assn of Realtors) , pending home sales rose just 0.3% in August from July and remain 4.7% below a year ago. Higher borrowing costs continue to offset gains in income and buying power.

NAR Chief Economist Lawrence Yun cautions that rates could stay elevated as inflation and other economic pressures persist. His words: "Expect 7% as the new normal."

That changes the conversation. Instead of building your home search around the hope of lower rates, build it around what you can afford today and what would need to change for you to feel comfortable moving forward. (Happy to show you my affordability calculator).

More choices, less competition this fall

There's good news on the other side of higher rates. Realtor.com identifies September 27 through October 3 as the best week to buy a home in 2026. More inventory, lower list prices, and less competition could give buyers real leverage during that window.

Active listings are projected to be about 32% higher than at the start of the year. Buyers could save roughly $14,000 compared with the summer price peak.

A word of caution: don't circle one week on the calendar and panic, though. As Realtor.com Senior Economist Hannah Jones puts it, "Buyers should use this window strategically rather than treating one week as a deadline."

What this means for Austin Real Estate

National numbers set the tone, but local conditions decide your deal. Inventory, pricing, and negotiating power look very different in Westlake, South Austin, Bee Cave, and Dripping Springs. The buyers who do best right now are working with a Realtor who knows their micro-market: how long homes are sitting, where sellers are cutting prices, and where there's room to negotiate on price, closing costs, or a rate buydown.

If you're a first time home buyer

Start with these four steps:

• Get pre-approved at today's rates. Use a real number, not the rate you're hoping for.

• Set your budget by monthly payment. Work backward from what fits your life, not just the maximum loan you qualify for. Again, let’s look at my affordablility calculator.

• Ask about your options. Seller concessions, rate buydowns, and different loan programs can all change your math.

• Look now, even if you buy later. Knowing the market puts you in position to move when the right home shows up.

If you're thinking about selling

More inventory means more competition for your buyer's attention. Pricing, presentation, and strategy matter more than they did during the frenzy years. An experienced listing agent who knows your neighborhood's pricing down to the street can be the difference between a quick sale and a stale listing.

The bottom line

Texas Real Estate isn't waiting on the Fed, and you don't have to either. Whether you're ready to find a home in Texas or get out of Texas, or you just want to understand what today's rates mean for your budget, I'm happy to walk you through the numbers with no pressure.

Reach out to me, Bonnie Palmer at 512-507-8980 or bonnie@bonniepalmer.com.

Insta: @atxbonnie

GoogleBP: https://share.google/e6jFGDoYbucb1XwcF

Sources

• Federal Reserve, FOMC statement, September 16, 2026

• Freddie Mac, Primary Mortgage Market Survey, September 17, 2026 (freddiemac.com/pmms)

• National Association of Realtors, Realtor News: "7% Mortgage Rates Reshape the Buyer Conversation"

• Realtor.com, 2026 Best Time to Buy report