L
awrence Yun, chief economist at the National Association of Realtors, believes demand for homes is present but being held back by a key factor. At the NAR's mid-year legislative meetings, Yun pointed to 30-year mortgage rates hovering around 7% as the main obstacle. This rate has been stubbornly high, and Yun sees it as the "magic bullet" that needs to come down to boost the market.

    Despite signs of moderating home price growth and wage growth outpacing inflation, Yun remains cautious due to uncertainty surrounding interest rates. The Federal Reserve's decision not to cut rates this year has kept mortgage rates elevated, with Fed Chair Jerome Powell expressing doubts about future rate cuts in 2025. However, Yun notes that factors like softening inflation and potential rate cuts by other countries could persuade the government to resume cutting interest rates.

    Government debt is another concern for Yun, who warns that unchecked spending will lead to reduced Social Security checks within a decade. He predicts six interest rate cuts over 12-18 months if the Fed decides to act.

    Meanwhile, Realtor.com Chief Economist Danielle Hale highlights the impact of recession fears on home sales and notes that sellers are often pricing their homes too high, leading to price cuts. Hale advises agents to explain this market reality to clients in the coming months. While regional markets like the Midwest and Northeast remain strong for sellers due to inventory constraints, a national housing shortage persists, which will take years to address.