Even a 1 % decrease in the mortgage rate can be enough to “cancel” the frozen housing market, says Oxford Economic.

But not all hope is lost in the American housing market, at least according to an economist. Bob Schwartz, senior economists with Oxford EconomicsHe said luck While there is “no quantitative measurable rate” that would cause more home sales, a 1 % decrease in mortgage rates to less than 6 % should be “sufficient from incentives” for at least some current homeowners to sell their homes and “trade”.

One of the main factors to maintain Frozen American housing market It is the mortgage rates. During the epidemic, buyers were imprisoned at a mortgage rate under 3 %. But now that the mortgage rates are hovering between 6 % and 7 %, current Homeowners have a little incentive To sell their current homes or “trade”, says Schwartz, or reduce their size. New buyers are also resistant to high mortgage rates, which have seen in modern memory.

In fact, the percentage of mortgages suspended at a rate above 6 % has multiplied more than twice since 2021, according to Zarstz, but this figure is still less than 20 %. More than 50 % of suspended real estate loans have rates of 3 % to 4 %.

While Schwartz said luck The mortgage rates will have to “significantly decrease” from the current 6.63 % to transport the masses of homeowners from side lines and put their homes for sale, can encourage the smallest decrease of enough people to do so.

“The housing market will be the largest beneficiary of the low prices because they will open the frozen sales by homeowners who are visiting the low -price real estate loans made in the next decade of the great stagnation,” Schwartz wrote in the August 8 note.

Other recent reports also showed the lack of faith in real estate mortgage rates that decrease to the levels of the epidemic and how other housing market factors play in concerns the ability to afford housing costs in the United States. The Zillow report showed a 0 % mortgage rate In some American cities, it will not be enough to make housing affordable because home prices are still very high; It has risen more than 50 % since the beginning of the epidemic.

The high prices of homes “is the greatest obstacle”, Michel Griffiths, a luxury real estate broker with Douglas Eliman, based in New York City, previously informed luck.

Griffin said: “The stock is narrow and the competition is high, and therefore the cost of the property itself is what keeps most of the buyers on the margin,” Griffin said.

Re -financing and mortgage expectations in the future

While low mortgage rates may encourage explicit sales, Schwartz said luck Another possible scenario is that current homeowners are funding to a lower rate. Although this may not dissolve the frozen housing market as much as the Americans may hope, this may be good for the economy in other ways.

“It can have a significant increase in formulation a significant impact on spending, especially if there is a large part of a variety of cash,” Schwartz said. “Homeowners sit on $ 34.5 trillion of residential stocks, which can be used for spending purposes.”

Certainly mortgage rates must “fall significantly” until this happens, which is what the economist in Oxford does not see in their outlook at this stage.

Regarding the mortgage rates, all of the eyes were at the meeting of the Federal Open Market Committee (FOMC) in the Federal Reserve (FOMC) in September, which will determine interest rates. On Tuesday, the consumer price index summary stated that inflation had only 0.2 % in July, raising inflation from the address to 2.7 %, better than expected. However, it progresses on the goal of the Federal Reserve by 2 %.

Zarzz said that while the consumer price index report had a little impact on the 10 -year treasury rate, which is the criterion for mortgage rates, it should not prevent the Federal Reserve Bank from lowering interest rates in September.

He added, “Although inflation is still a 2 % sticky and at the goal of the Federal Reserve, we still believe that the Federal Reserve will wait until December to reduce it,” he added. “However, if the next August job report is Dodd, similar to one in July, the possibilities that the Federal Reserve will be reduced in September.”

Submit 2025 Fortune Global 500The final ranking of the largest companies in the world. Explore this year’s list.