Experts Predict What the Real Estate Market Will Look Like Once Mortgage Rates Drop

Mortgage rates that have stalled the U.S. housing market are dropping and could fall further by year’s end. The 30-year fixed mortgage rate dipped to 6.47% for the week ending Aug. 8, the lowest in over a year. As inflation eases and the economy slows, experts expect the Federal Reserve to cut rates twice by year-end, potentially lowering mortgage rates even more.

This drop could encourage both buyers and sellers. Many homeowners, with mortgage rates below 6%, have hesitated to sell due to higher rates, but falling rates might change that. Lower rates could also bring more buyers back into the market, making homes more affordable.

Sellers should prepare now, as improving rates may spur early buyer interest. Mortgage applications and refinancing activity are already increasing. If rates continue to fall, the market could see a surge in activity.

Despite more sales, home prices are likely to remain high due to a shortage of available homes. Sellers should price realistically to attract multiple offers and ensure a quick sale. As competition heats up, sellers may gain leverage, but the highest offer isn’t always the best—terms should be carefully considered to align with their goals.