Published by REALTOR.com | September 16, 2024
38% of Americans have put off purchasing a home because of high mortgage rates
Mortgage rates are at their lowest level in over a year after dropping to 6.2% for the week ending Sept. 12—and they could fall yet again if the Federal Reserve cuts rates at its next meeting on Sept. 18.
But are these rate drops enough to lure more homebuyers to the market? Not quite, according to a recent Realtor.com® poll of 2,201 individuals, who revealed in early September just what it will take to coax them onto the property ladder.
The survey found that over one-third (38%) of Americans have put off purchasing a home because of high mortgage rates—and the recent drop from 6.35% to 6.20% for a 30-year fixed mortgage isn’t quite enough to persuade them to immediately consider taking out a loan on a property.
In fact, only 6% of Americans said they would consider buying a home in the next six months if mortgage rates decrease by between 0.25 and 0.75 percentage points. Meanwhile, 28% said current mortgage rates would need to decrease by 2 whole percentage points or more for them to consider buying a home in the next six months.
But brighter buying conditions are on the horizon, according to experts.
Mortgage experts agree that we have a ways to go before more homebuyers feel ready to get a home loan—but noted that sales are likely to “pick up considerably” if rates continue to drop from their recent 7.8% peak in October 20203, and remain steady.
“We’ve been in the 7% range for two years with various peaks up into the 8s,” says Dan Richards, president of Flyhomes Mortgage in Seattle. “Rates need to drop 2% from their peak and stick for the duration.
“Historically, demand picks up in a declining rate environment when the percentage drop is around 2% from the peak,” adds Richards. “So knowing we peaked at 7%–8% this cycle, I expect home sales to pick up considerably for millennial buyers once we’re between 5% and 6% for a prolonged period.”
Gen Z and millennial buyers have been particularly hit hard by high rates, with 47% saying they’ve delayed purchasing a home because of high rates.
