Housing market rebound ‘will depend heavily’ on rate relief: Survey

Agents are coming to the conclusion that significantly lower mortgage rates are needed to stimulate the housing market — and if that doesn't happen soon, many expect home sales and prices to soften in 2027.

Agent optimism falls: Real REMAX Group's Agent Optimism Index, which measures the 12-month outlook of agents affiliated with The Real Brokerage on a scale of 0 to 100, came in at 45.8 in September, down from 54.3 the previous month.

Lower rates needed: Much of the pessimism reflected in that decrease concerns mortgage rates, according to the firm's monthly agent survey released Oct. 30. Nearly two-thirds (65%) of the 177 agents surveyed from Oct. 1-9 believe that 30-year rates must drop below 6% to "meaningfully stimulate buyer demand." Over 1 in 3 (37%) think rates need to drop below 5.5%.

The elevated rates seen in recent months are impacting homebuyer behavior, with 2 in 3 survey respondents saying buyers are pausing or delaying their home search process. Homesellers are similarly pessimistic: 39% of agent respondents said they've had potential sellers delay plans to list their home, although there's an increasing number of sellers expressing a willingness to reduce their asking price (reported by 35% of respondents) or offer concessions (34%).

If rates remain in the 7% range next year, nearly 60% of respondents expect to see home prices drop, with 33% expecting prices to fall more than 5%.

What's needed for a 'sustained' market recovery: "Higher mortgage rates are putting renewed pressure on an already challenging housing market," Real REMAX Group Chairman and CEO Tamir Poleg said in a news release accompanying the survey's results.

"Buyers have more negotiating leverage today, but affordability remains a significant obstacle, causing many to delay their home searches," Poleg added. "Looking ahead, the survey suggests that a sustained recovery in housing activity will depend heavily on meaningful relief in mortgage rates."

Goldman Sachs also bearish on housing in 2027: The survey's findings appear to be in line with Goldman Sachs' 2027 housing market forecast, which predicts a drop in sales of existing homes and in new home construction. The firm's economists are anticipating 3.9 million existing home sales in 2027 — which would be the lowest annual total in decades — and expect prices to rise 0.8%.

"The combination of mortgage borrowers refinancing at low rates en masse in 2020 and 2021 and the high current level of mortgage rates has created a significant financial cost to moving," Goldman Sachs economic forecasters Ronnie Walker and David Mericle wrote.