U.S. Mortgage Rates Need to Drop Below 6% to Boost Housing Market, Experts Say

The National Association of Realtors (NAR) projects that mortgage rates need to fall below 6% to significantly revive the subdued U.S. housing market. A 30-year fixed-rate mortgage under this threshold could make homes affordable for approximately 5.5 million additional households, potentially enabling about 550,000 of them to purchase homes within 12 to 18 months. However, economists, including those at Fannie Mae, do not anticipate rates dropping below 6% until at least 2027, limiting immediate market revitalization.

Despite hopes for rate cuts in late 2025, experts like appraisal firm CEO Jonathan Miller express skepticism, pointing to ongoing economic uncertainties and risks that discourage lenders from reducing rates. This cautious banking behavior sustains elevated mortgage rates, which have remained relatively stable in the mid-6% range since early 2025. This stability, according to NAR deputy chief economist Jessica Lautz, offers some predictability for buyers amidst a constrained housing supply.

Lautz emphasizes that while lower mortgage rates would typically stimulate demand, the current environment with steady rates and limited buyers prevents intense competition and inflated home prices. She advises prospective buyers to focus on controllable factors such as improving credit scores, reducing debt-to-income ratios, and increasing down payments over the coming months to maximize mortgage affordability when purchasing.

Future rate forecasts from Freddie Mac align with this outlook, predicting 6.4% rates at the end of 2025 and 6% by the close of 2026. Given the housing shortage, average home prices are unlikely to decline significantly, implying that buyers may not see dramatic cost differences between purchasing now versus waiting for potential rate decreases.

Overall, the current mortgage rate and housing market conditions require buyers and industry professionals to adopt strategic approaches focused on financial preparedness and market timing, rather than anticipating rapid rates declines or price drops.