Home prices could soar when mortgage rates fall to a certain level, according to a forecast from American investor Barbara Corcoran.
Speaking in an interview on "Cavuto: Coast to Coast," Corcoran said home prices are "going to go through the roof" if mortgage rates fall a full percentage point, adding that the market could see another home buying boom. This could lead home prices to increase by between 8 to 10%.
As of March 28, the mortgage rate for the 30-year fixed-term loan is 6.79%, while the rate for the 15-year fixed-term loan was 6.11%, according to data from Freddie Mac.
"I can't explain the rates going up or down - that's not my bailiwick. But what I can explain is if rates go down, just another percentage point, that's what I'm hoping for, prices are going to go through the roof," Corcoran, founder of The Corcoran Group and an investor on "Shark Tank," said in the interview published Wednesday.
"Everyone will come out and buy. There are probably 10 buyers on the sidelines waiting for interest rates to come down that are actually active in the market. So everybody's going to charge the market," she added.
While plenty of factors play a role in the soaring prices of homes, Corcoran said a lack of supply in the housing market overrides all other reasons.
"Whenever there's uncertainty, people stall. And whenever people stall, it stalls the marketplace. So any kind of uncertainty slows down the market. But despite that, and overriding all of that, is a shortage of houses. You can't erase a shortage of houses, and it's going to push that market forward," she noted.
Home Prices in the US
Corcoran's forecast comes after US home prices hit an all-time high in December. Prices in that month rose 0.2% from November, marking the seventh consecutive record high in 2023, seasonally adjusted data from the S&P CoreLogic Case-Shiller US National Home Price Index showed. In comparison to a year ago, home prices are now 5.5% higher from December 2022.
Home prices increased in half of the 20 metro markets analyzed, with Las Vegas being the fastest-rising market in December.
