Mortgages Will Return to 6%, NAR Forecasts

WASHINGTON – (By Dale King, Realty News Report) – Mortgage rates are expected to drop to 6% but that probably won’t occur until next year, according to a forecast by the chief economist of the National Association of Realtors.

Speaking at the association’s Forecast Summit last week, NAR Chief Economist and Senior Vice President of Research Dr. Lawrence Yun predicted a likely drop in mortgage rates next year – a reduction he feels could bring renewed life to a still-sluggish home sales market.

With 30-year mortgage rates currently hovering around 6.7%, a drop to 6% would enable millions of Americans to buy houses.

“Even a modest decline in mortgage rates can improve affordability,” he said. “If mortgage rates fall to 6%, NAR expects that an additional 5.5 million households in America, including 1.6 million renters, will have the income needed to buy a median-priced home. Approximately 10% of the additional households would be expected to buy over the next 12 to 18 months if rates decline.”

Some of NAR’s other projections for this year and next, he said, are:

3% increase in home sales in 2025 and 14% increase in 2026.

1% rise in home prices in 2025 and 4% advance in 2026.

6.7% average rate for a 30-year mortgage in 2025 and a 6% average in 2026.

Atlanta, Dallas, Minneapolis, Cleveland, and Kansas City are cities expected to see the strongest boost in home sales activity if rates decline to 6%, he explained.

During a mid-July webinar, the National Association of Realtors unveiled its new NAR Market Statistics Dashboard. The interactive Dashboard is updated monthly and provides NAR members with data on housing affordability, sales and listing trends, home pricing changes, economic indicators, homeownership and demographic trends.

Yun used a real time example of the new Market Statistics Dashboard during the webinar. He turned to NAR Treasurer Craig Sanford, an Arizona Realtor. “When I look at your market out in Phoenix, I see that someone who bought a home there 10 years ago has accumulated $320,000 in housing growth,” Yun said.

During his talk, Yun, the chief economist, offered encouraging news about the mortgage market and the nation’s financial condition. Despite what some people see in the media, he said, “We have a low mortgage delinquency rate and even lower level of foreclosures. We are in fine shape – we are on solid ground.  And just think: 35 million homeowners have no mortgages are all.”

Yun also touched on the drive generated by intense job growth – “7 million new jobs” – though the rosy employment situation still hasn’t wiped out the mortgage obstacle.

“We have huge potential demand,” he said. But what is keeping would-be purchasers from buying homes? “High mortgages.”

Migration trends; buyer reactions

NAR Economist Anat Nusinovich picked up after Yun, offering an overview of U.S migration trends. “The total population of the nation grew 1% from 2023 to 2024, reaching just over 340,000 people,” she said. This was the fastest period of growth since 2001.

She said the District of Columbia grew the fastest, up 2.2%, outpacing a couple of other areas that populate rapidly: Florida (2.0%) and Texas (1.8%). The heavy D.C. influx was the result of two factors, she said: COVID recovery and the draw of a new presidential administration.

Nusinovich did point out that the South is still the fastest growing section of the country, as it has for several years, and Texas tops the domestic migration chart. Most popular Lone Star State destinations are the Dallas and Houston metros.

Overall, “the South grew by 1.8 million people from 2023 and 2024,” she noted, even though the expansion was slower than previous years.

Driving growth in the South, she said, are “more jobs and smaller mortgage rates.”

All Cash Buyers Dominate

Deputy Chief Economist and Vice President of Research Dr. Jessica Lautz wrapped the 50-minute webinar with a focus on buyer reactions to the market. “All-cash buyers really dominate,” she said. “One-third of purchasers buy with all cash.” This includes 50% of older baby boomers and 40% of younger boomers. Even one in 10 first-time buyers come to the table with all cash in hand. They tap savings accounts, “mom and dad,” financial assets and other sources.

While boomers reign, first-time buyers struggle. Lautz noted there are many programs to help those who’ve never bought a house before, and NAR has an “Info-graphics” page offering help.

Right now, the first timers require that assistance. “The number of first-time buyers has plummeted to its lowest level, 24%, while the norm is about 40.” Among reasons for the drop, she said, are interest rates, home prices, inventory restraints and “outside-of-the-market influences.”

She reported an “uptick” among first timers during the winter when competition was less intense. She urged home seekers to ignore statistical myths and cut to the facts. “Not every mortgage has to be 20%. They can be 9%. And a third of buyers use FHA.”


July 21, 2025 Realty News Report Copyright 2025

Photo credit: Ralph Bivins, Realty News Report, Copyright 2025

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File: Mortgages Will Return to 6%, NAR Forecasts, Yun, Mortgages Will Return to 6%, NAR Forecasts, Dashboard Mortgages Will Return to 6%, NAR Forecasts, Lautz Mortgages, All-cash

 

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