When the Federal Reserve reduces interest rates, it impacts the real estate market. How so? A drop in the interest rate means home buyers will pay more to buy a home locally. It means it will be harder for lenders to offer loans, limiting the number of home buyers you have. It has no impact on the actual market, but only on the larger banks themselves. Home buyers may qualify for lower rates, impacting the number of people who want to buy and the amount they can afford to spend to buy a home