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At Associated Industries of Massachusetts’ annual outlook event surveying the future of the Massachusetts economy, housing affordability and production were top of mind.

As home prices continue to rise in the commonwealth, the Healey administration understands that affordability is a concern for Massachusetts residents, said state Secretary of Administration and Finance Matthew Gorzkowicz.

“Everything we’ve done since coming into office has been with an eye towards improving Massachusetts affordability, equity, and competitiveness,” he told the gathering of business leaders Thursday morning. “We want to make sure our corporations, small businesses, nonprofits and families can not only afford to stay in Massachusetts, but they can thrive. We know that our health as a state is dependent on people having access to jobs, housing and a strong quality of life.

Gorzkowicz said he is hopeful that the Federal Reserve’s interest rate cut last week will “spark” the housing market and encourage owners who may have put off selling their home to get back in the market.

“This could not only improve inventory, but allow those who have been saving, maybe for their first home to see those dollars go further,” he said.

With interest rate cuts have also come mortgage rate cuts as the bond market anticipated the Fed’s actions, although the rapid drop in mortgage rates over the last three months appears to have halted. PNC Chief Economist Gus Faucher predicted that mortgage rates will continue to drift lower and reduce the lock-in effect and add more inventory to the housing market.

As the financial burden of purchasing a home increasingly weighs down on buyers, these cuts will provide much needed relief. Way Finders President and CEO Keith Fairey noted that when working with homeowners, Way Finders saw a lot of distress and concern.

With the Federal Reserve cutting its benchmark short-term interest rate by 50 basis points, there is optimism that this is just the beginning. Faucher predicted Thursday that interest rate cuts could continue all the way into 2025 based on central bankers’ predictions released by the Fed after last week’s meeting. Additionally, he predicted rates will land around 3.5 percent in the middle of 2025.

“That’s going to show up immediately in things like variable rate business loans that are tied to Prime,” Faucher said. “It’s going to show up in credit card rates. That being said, it does take time for lower interest rates to work their way through the economy so I don’t expect we’re going to get a burst of growth between now and the end of 2024. I think we’ll start to see the impact in 2025, particularly in interest rate-sensitive industries.”

Interest rates will also affect new construction in the state. Fairey noted that lower interest rates will help housing developments that were put on pause resume development.

“We had projects that we had a plan to develop back in 2021 and 2022 when interest rates started to rise, construction trust came up,” he said. “Those projects were fully funded by the Commonwealth and then they weren’t. So those projects are now back on track and not only our projects but our partners as well so there’ll be much opportunity for housing growth in Western Massachusetts and across the commonwealth.”