SEATTLE–There is relief on the horizon for the strained real estate market, according to at least one analyst.
Chen Zhao, the head of economic research at Redfin, told Business Insider she believes housing supply will start increasing by the end of 2025. While the bad news is the days of the 3% mortgage rate are gone, Zhao says it’s very unlikely—unless there is a full-blown recession—rates will drop below 5% to 5.5% in the longer term.
But they will come down from their current averages and “faster than expected,” Zhao is predicting, forecasting a September rate cut by the Fed as “nearly 100% certain.”
"It's very possible that mortgage rates will be in the lower sixes by the end of this year," Zhao told Business Insider. "They could be hitting the high five or mid-fives towards the end of next year."
Ready to Sell
Lower rates should also break the logjam created by current homeowners who would like to sell but have held off because they don’t want to give up their current low mortgage rate.
Zhao told the publication a 5.5% mortgage rate will unlock a lot of current homeowners for two reasons:
- To tap home price appreciation
- Many more new homes are coming onto the market