The average 30-year fixed mortgage rate is around 6.5% at press time, and June existing home sales fell to a nine-month low. In fact, one in seven potential deals fell through that month, according to data from the National Association of Realtors (NAR). Home prices, meanwhile, are still rising, up 2% from a year ago.
Basically, the real estate market is a mess right now. And house hunters are wondering if they will ever see relief, at least in the form of lower interest rates.
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Experts say it will happen, but now is not the time to start holding your breath. Mortgage rates will only go below 6% when the rate of inflation drops much closer to the Fed’s goal of 2%, says Melissa Cohn, regional vice president of William Raveis Mortgage.
“It will also take a softening economy and a weakening employment sector to get rates to go down. With new tariffs about to be implemented, it will likely take much longer than we had anticipated for rates to drop,” Cohn told Entrepreneur. “Remember, bad news for the economy is good news for rates.”
Rates are expected to stay in the mid-6% range for at least the next couple of quarters and into 2026. According to Yahoo Finance, many experts don’t think rates will go below 6% at all in 2026, though the Fannie Mae July Housing Forecast forecasted rates will drop to close to 6% in Q3 2026.
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Historically, rates have dropped during times of economic turmoil, like the Covid pandemic, when rates reached historic lows of 2.65%, and the Great Depression, notes Yuval Golan, founder of the real estate financing platform, Waltz.
“Typically, during times of economic challenges, there’s an incentive to stimulate the economy,” Golan tells Entrepreneur. “One way to do this is by lowering interest rates to encourage consumerism — from cars to housing and everything in between.”
So what can home buyers do now? Barbara Corcoran recommends looking at homes that have been on the market a while and shopping in the off-season (in winter, or after the school season has started) — and not waiting.
The best time to buy is always “now,” she says.