Most potential homebuyers expect mortgage rates to drop
Many prospective homebuyers are holding off on purchasing because they expect mortgage rates to drop further, despite rates already being near their lowest in a year at 6.17% for a 30-year fixed loan. According to a CNBC Housing Market Survey of 54 real estate agents nationwide, this expectation is a major reason buyers are waiting. While current market conditions favor buyers, affordability remains the top concern, followed by economic uncertainty. Some buyers are adjusting by using interest rate buydowns, opting for adjustable-rate mortgages, borrowing from family or friends or compromising on home size, location or features. Agents note a standoff in the market, where sellers price for a strong market but buyers are waiting for rates and prices to drop.
On the supply side, inventory and new listings are improving compared with last year, though affordable homes remain scarce. Many sellers are reducing asking prices or temporarily delisting homes to wait for better conditions, with about 89% of agents reporting at least one seller cut their price. Home price gains continue on an annual basis but are slowing, with the strongest increases in the Northeast and Midwest and weaker growth in the South and West. Despite the improving supply, historically tight inventory and lingering affordability challenges mean the market remains cautious, with agents expecting sales to either stay steady or improve slightly over the next quarter.
