Home prices remain elevated, with mortgage rates lingering around 7%, making homeownership challenging for many Americans.
The quantity of unsold homes, including those under contract, has risen by 20% compared to last year.
An economist from the National Association of Realtors® mentioned that a 6% 30-year fixed mortgage could enable about 5.5 million households, including 1.6 million renters, to afford median-priced homes.
If the mortgage rate decreases to 6%, around 10% of these additional households might be eligible to purchase homes over the next year or so, translating to about 550,000 households.
“It’s a common theme among my clients. They want to buy, but they feel like mortgage rates are holding them back,” said real estate agent Alexei Morgado. “It’s not just the rates; it’s the worry about making the wrong decision or overcommitting. The frustration of paying more for less is discouraging for many.”
“Buyers faced similar challenges last year with rates approximately where they are now,” said Hannah Jones, a senior economic research analyst. “But higher prices seem to be the ‘new normal,’ and this has dampened buyer enthusiasm, particularly for those hoping for a swift drop in rates. As a result, sellers are being encouraged to loosen their grip on prices to attract interest.”
NAR forecasts suggest that mortgage rates may dip to around 6% by 2026, possibly boosting home sales by 14%. Certain metro areas, including Atlanta, Dallas, Minneapolis, Cleveland, and Kansas City, are expected to see significant increases in sales if rates decrease.
Here’s a quick look at home prices in various metros as of June:
Atlanta, Georgia
- Median Price: $421,000
- Market Median Days: 51
Cleveland, Ohio
- Median Price: $277,000
- Market Median Days: 37
Dallas, Texas
- Median Price: $440,000
- Market Median Days: 50
Kansas City, MO-KS
- Median Price: $409,475
- Market Median Days: 45
Minneapolis, Minnesota
- Median Price: $447,900
- Market Median Days: 37
The Waiting Game
According to NAR economists, prospective buyers waiting for lower mortgage rates may be overlooking opportunities. The inventory of homes is increasing, granting buyers more choices and leverage in negotiations.
While home prices are still on the rise, the pace has slowed. NAR anticipates a national increase of about 1% before a jump to a 4% rise in 2026.
“More Americans are finding financial security through real estate,” stated Lawrence Yun, NAR’s chief economist. “The net worth tied to homes is stable, supported by lower delinquency and foreclosure rates.” For instance, homeowners in Phoenix have seen an average gain of $320,860 over a decade.
But whether now is the right time to buy really hinges on personal circumstances. Morgado advises, “It’s crucial to approach the market with realistic strategies. Focus on what you can afford without compromising your peace of mind.”
Rate Watch
The upward trend in mortgage fees has significantly impacted applications, with demand falling by 10% in the week ending July 11th.
According to Freddie Mac, the average 30-year fixed mortgage rate rose to 6.75% for the week ending July 17th, up from 6.72% the previous week.
This increase has led to a decline in mortgage applications, as reported by the Mortgage Bankers Association. Economists attribute this drop partly to concerns about the economic impact of tariffs.
President Trump’s uncertain stance on tariffs has caused home builders to hesitate, as rising supply costs slow down the pace at which buyers are entering the market.
Additionally, inflation continues to rise, with the consumer price index increasing by 2.7%, as per new data from the Bureau of Labor Statistics.
