Mortgage Rates Remain the Biggest Hurdle
If you’ve tried to buy a home lately, the numbers might have given you sticker shock—not just the list price, but those relentless mortgage rates hovering above 6%. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), doesn’t sugarcoat it: these rates are the top thing holding back the U.S. housing market right now. For most of 2024, steady rates in the mid- to high-6% range blocked many would-be buyers on the sidelines, even as the economy offered a few green shoots.
Still, Yun sees light at the end of the tunnel and manages to stay optimistic. He points out that steady rates, while unpleasantly high for some, have brought a little predictability—enough to coax back a small wave of determined buyers. But here’s the thing: affordability remains a real struggle, with monthly payments eating up more household budgets and tight listings keeping homes out of reach for many.
Why Recovery Looks Slow—But Not Hopeless
Yun’s forecast isn’t all doom and gloom. He’s doubling down on his earlier call for 6 to 8 Federal Reserve interest rate cuts over the next two years. If that pans out, buying a home should get a bit easier. Yun predicts a 9% jump in home sales for 2025, ramping up to a 13% boost in 2026—assuming those rate cuts arrive and more homes actually appear for sale. The expectation for median home prices? A slow but respectable 2% rise each year through 2026. No overnight windfalls here, but not a crash either.
Even in the middle of all this, buyers and owners are finding ways to adapt. Despite higher costs, employment gains are offering a buffer—more people have steady paychecks, which strengthens demand overall. There’s also been a flood of home equity lending. In fact, Americans pulled a record $48 billion out of their properties in just the third quarter of 2024, using that cash to renovate, spend, or consolidate debt.
The market’s biggest headaches right now? Inventory is just too tight. There aren’t enough listings, and what’s available often pushes budgets to the limit. Yun suggests any hope for a real rebound hinges not just on lower rates, but also on honest-to-goodness growth in housing supply. He’s also watching government budget deficits as a possible spoiler—if spending runs wild, it could keep rates higher for longer and slow everything down.
Still, there’s energy bubbling under the market’s surface. If inventory loosens up and mortgage rates finally take a breather, 2025’s second half could look a lot brighter than the slog of 2024. For now, buyers and sellers are playing the waiting game, hoping for that bite of good news on rates and listings that have been so hard to come by.
Jun, 5 2025