On Wednesday, Fed Chair Jerome Powell announced that the central bank would begin cutting Fed interest rates, starting with a .50 percentage point (50 bps) cut this month. The Fed also signaled that additional cuts were likely in their final two meetings this year in November and December, and more next year.

"The Fed’s decision was pretty aligned with market pricing," Zhao notes, so a major drop in mortgage rates is highly unlikely. But if the Federal Reserve were to make further cuts more slowly than markets are currently predicting, she says "rates have a little bit of room to potentially come up."

Over the past couple of years, the US economy has wrung out inflation like dirty mop water from just about every sector — except for the housing market, which remains paralyzed by high prices and chronically low supply.