Quick answer: On September 16, 2026, the Federal Reserve raised the federal funds rate by a quarter point to 3.75% to 4%, its first increase since July 2023. The Fed does not set mortgage rates directly, and they had already risen ahead of the decision. Freddie Mac's 30-year fixed averaged 6.76% as of September 10, 2026, compared with 6.35% a year earlier. The bigger local story is inventory. Active listings across the NWMLS service area were up 22.0% year over year in August, and Snohomish County posted one of the largest increases at 39.3%. Buyers have more choice and more negotiating room than they've had in years, and people are still buying.
What did the Fed decide on September 16, 2026?
The Federal Open Market Committee voted unanimously to raise the federal funds target range by 0.25%, to 3.75% to 4%. In its statement, the Committee said economic activity is expanding at a solid pace but inflation remains elevated, and that the increase will support a timelier return to its 2% goal. At his press conference, Chair Kevin Warsh said inflation has been too high for too long.
This was the Fed's first rate increase since July 2023, and its updated economic projections point to the possibility of one more increase before year end. The remaining scheduled meetings this year are October 27 to 28 and December 8 to 9.
Does the Fed rate hike raise mortgage rates?
Not directly. The federal funds rate is an overnight rate banks charge each other. Thirty-year mortgage rates track long-term Treasury yields, which respond to inflation expectations and government borrowing.
That's why mortgage rates climbed before the announcement. Freddie Mac's survey showed the 30-year fixed at 6.71% on September 3, up from 6.66% the prior week, then rising again to 6.76% on September 10. Much of the hike was priced in before the Fed acted.
The rates that do move directly with the Fed are those tied to the prime rate. That includes most home equity lines of credit (HELOCs), many adjustable-rate loans after their fixed period, and credit cards.
What does this mean for Puget Sound homebuyers?
Here's the payment math on August's median prices, assuming 20% down. Principal and interest only; taxes, insurance, and association dues are excluded.
County | August 2026 median | P&I at 6.01% (Feb. 2026 low) | P&I at 6.76% | Monthly difference |
|---|---|---|---|---|
King | $845,000 | ~$4,057 | ~$4,389 | ~$332 |
Snohomish | $724,500 | ~$3,479 | ~$3,763 | ~$284 |
King and Snohomish had the second and third highest median sales prices in the NWMLS service area in August.
That difference is real. But rates are only half of affordability. The other half is how much room you have to negotiate, and that has shifted in buyers' favor. NWMLS reported 4.21 months of inventory in August, up from 3.19 months a year earlier. More listings mean more choices, fewer bidding wars, and more sellers open to concessions.
Are people still buying homes right now?
Yes. In August 2026, 5,861 homes and condominiums closed across the NWMLS service area. Another 7,121 went under contract that month.
Buyers are also still touring. Total scheduled showings dipped 3.2% year over year, but 26,619 listings received at least one showing, an 11.4% increase. Showing activity was spread across more listings. Buyers haven't disappeared. They have more options and are taking their time.
If rate headlines have discouraged you, the buyers closing today show that the numbers can still work, especially with the right loan structure.
What loan options are helping buyers in 2026?
Down payment assistance. Many buyers assume they won't qualify without checking. In August, 74.7% of listings in the NWMLS database qualified for down payment assistance programs. Eligibility depends on the program, your income, and the property, so ask your lender which ones apply to you.
Seller-paid rate buydowns. A permanent buydown lowers your rate for the life of the loan. A temporary buydown, often structured as a 2-1, lowers your payment for the first two years. At Puget Sound prices, dollars applied to the rate often outwork dollars off the price. On the Snohomish County median with 20% down, a $10,000 price reduction lowers the payment by roughly $52 a month. The same $10,000 toward a permanent buydown could save closer to $150 a month, depending on lender pricing. Treat that as an illustration and get a real quote.
New construction incentives. Builders are offering rate buydowns, closing cost credits, and upgrades. Ask what the incentive is worth if you use your own lender, so you can compare offers fairly.
Adjustable-rate mortgages. ARMs are worth a look if you expect to move or refinance within the fixed period. Ask about the index, margin, rate caps, and worst-case payment. If the worst-case payment doesn't work, the loan doesn't either.
FHA, VA, and assumable loans. Government-backed loans often price differently than conventional loans. FHA, VA, and USDA loans can also be assumed with servicer approval, though you'll need to cover the gap between the loan balance and the price. VA assumptions carry entitlement considerations for the seller, which matters near JBLM and Naval Base Kitsap.
What does the rate hike mean for homeowners and sellers?
If you have a HELOC. Your rate is likely tied to prime, which typically rises by the same quarter point. Expect it to adjust within a billing cycle or two. If you plan to use a HELOC to buy your next home before selling your current one, re-run those numbers now.
If you're selling this fall. Fewer buyers can stretch their budget, so pricing precision matters more than it did a year ago. Price to the last 60 to 90 days of local sales, not last spring. Consider offering a credit toward the buyer's rate instead of, or alongside, a price reduction. And prep for the season: shorter days and rain change how a home photographs and shows.
If you're staying put. Nothing changes for a fixed-rate mortgage. Your rate and your principal and interest payment stay the same.
Frequently asked questions
Did the Fed raise interest rates in September 2026?
Yes. On September 16, 2026, the Federal Reserve voted unanimously to raise the federal funds target range by 0.25% to 3.75% to 4%, its first increase since July 2023, citing elevated inflation.
Will mortgage rates go up because of the Fed rate hike?
Not necessarily. Mortgage rates follow long-term Treasury yields more than the federal funds rate, and they had already risen before the decision. Freddie Mac's 30-year fixed averaged 6.76% as of September 10, 2026. Future movement depends mostly on inflation data and bond markets.
Does the Fed rate hike affect my HELOC?
Usually, yes. Most HELOCs are tied to the prime rate, which moves with the federal funds rate. Check your loan documents for your index and adjustment schedule.
What is the median home price in Snohomish County?
$724,500 in August 2026, according to NWMLS. King County's median was $845,000.
Is it a good time to buy a home in the Seattle area?
It depends on your finances and timeline, but buyers have more leverage than in recent years. Months of inventory across the NWMLS service area reached 4.21 in August 2026, up from 3.19 a year earlier. Waiting for lower rates carries its own risk, because negotiating room tends to shrink when rates drop and sidelined buyers return.
When is the next Fed meeting?
The Federal Reserve's next scheduled meetings are October 27 to 28 and December 8 to 9, 2026.
The bottom line
The Fed's decision made headlines, but mortgage rates had already moved. The more important local change is inventory. Buyers in King and Snohomish counties have more choices and more negotiating room, and the loan tools that help offset higher rates are widely available.
Whether you're buying, selling, or managing a HELOC, run your own numbers before deciding based on a headline. For the longer view on rate forecasts and what waiting actually costs, read my August analysis: Waiting for Lower Mortgage Rates in Puget Sound?
I'm glad to run the math with you for any property or neighborhood in King, Snohomish, Pierce, Kitsap, or Island County.
Erin Corwin
The Corwin Group at Spire One Realty
Washington State Real Estate Broker, License #25008349
Serving Snohomish, King, Pierce, Island, Kitsap, and surrounding counties
Information and statistics compiled and reported by the Northwest Multiple Listing Service. Rate data from Freddie Mac's Primary Mortgage Market Survey, February and September 2026. Federal funds rate decision from the Federal Reserve's FOMC statement, September 16, 2026, and meeting schedule from the Federal Reserve System. Payment figures are illustrations of principal and interest only and exclude taxes, insurance, and association dues.
I am a licensed real estate broker, not a mortgage lender, attorney, or tax advisor. Loan programs, rates, and qualification terms are determined by your lender. Consult appropriate professionals for lending, legal, and tax advice.
