Home prices and mortgage rates in the United States may see declines soon, according to predictions from several experts.
Redfin CEO Glenn Kelman forecasted that house prices will drop this summer as homeowners trying to wait for elevated mortgage rates to fall are likely to come back to the market after realizing they can no longer postpone moving homes.
Already, sellers in key metro areas such as Florida and Texas are slashing their asking prices as the supply of homes for sale is surging. Nationally, 6.4% of home sellers issued a price cut in the month leading up to May 26, with the median asking price for homes dropping by $3,000 to $416,623.
"A lot of our customers are folks who got a divorce last year, and the husband and the wife are driving each other crazy, or they own a townhouse, and they've had a third child, and they're just bursting at the seams. At some point, even though people don't want to sell, they have to sell," Kelman said in a recent interview on The David Lin Report.
Homeowners are emotionally committed to their property. They have in mind a number, and they're loathed to give it up. So that makes home prices stickier. But still, I think it's going to be a pretty soft summer for home prices," he added.
Mortgage Rates Are Also Set To Drop
In addition to declining home prices, mortgage rates are likely to drop soon. The World Bank on Tuesday predicted that the cooling inflation could lead to a decline in borrowing costs, including mortgage rates, over the next two years.
"By the end of 2026, borrowing rates are expected to have declined substantially as inflation returns close to target," the World Bank said in a report.
Forecasts from Fannie Mae predict that mortgage rates for the 30-year fixed-term will drop to 6.6% by the end of 2024 and decline further to 5.9% by the end of 2025. The Mortgage Broker's Association forecasts 30-year rates to drop to 5.9% in the second quarter of 2025.
In the week ending June 6, the mortgage rate for the 30-year term is 6.99%, according to Freddie Mac.
