Waiting for better rates
More than half of the respondents of Millennial and Gen Z said that they postponed buying a house because of the mortgage interest rate, where Gen Z shows particular caution. Gen ZZ Respondents reported an increased preference for renting and a greater chance of postponing a purchase of a house compared to September 2024.
In general, 67% of the respondents of the survey said that the mortgage interest has influenced their decision to buy a house. Baby boomers are the least influenced, with 41% who say that rates have no influence on their plans. Only 2% of all respondents are considering buying a house if the mortgage interest rate is higher than 6%. Most (63%) said they are waiting for the rates below 5% before they make a purchase.
“Despite the current market challenges and persistent high mortgage interest, Millennials will show a remarkable increase in the interest in buying at home compared to last fall,” said Laura Eddy, vice -president of research and insights on RealTor.com.
“Although we have found a change in the intention of a Millennial-Homebuying, the influence of the mortgage interest rate cannot be overestimated, whereby the vast majority of Americans, including millennials, give priority to lower rates before they are committed to a purchase. The locking effect is still very powerful.”
The survey has also looked at how people buy purchases at home.
A majority (57%) said they use personal savings. Another 15% use personal investments or pension accounts, and 12% relate to gifts or loans from family members. Among those who are planning to buy a house, one in four said they are planning to use pension accounts or personal investments for financing.
Sellers carefully but motivated
The separate study by Realtor.com among potential sellers showed that half of the homeowners with a mortgage is enclosed by high mortgage interest rate. That sentiment is stronger with those who have thought about it for more than a year.
Expectations about future interest rates influence the plans of sellers.
Among potential sellers who think that rates will rise in the next 12 months, 43% said that this expectation makes them more likely, while 20% said it is reducing their chance. 69% of potential sellers who think the rates will fall, on the other hand, said that the expectation will increase their chance to sell.
“In a large part of our research we see a trend where potential home buyers are stuck when it comes to buying a house because of their current mortgage interest,” said Hannah Jones, senior research analyst at Realtor.com. “Mortgage interest on top of an insufficient range of budget -friendly houses makes the affordability image more difficult for many homeowners, in particular first home buyers who do not have equity of their existing home to compensate for mortgage interest.
“However, we expect that this lock-in effect will illuminate as more homeowners get tired of waiting for significant speed changes and as life factors such as jobs, children and retirement drive more to do a house purchase.”
Buyers and sellers remain sensitive to changes to the mortgage interest rate.
The study showed that 78% of potential sellers believe that the rates will remain or rise the same the following year. The expectation of tariff shifts will continue to be decisions in a market that is powered by high loan costs and limited housing stocks.
