--- title: The Unexpected Reason Home Prices Could Drop Soon description: High mortgage rates and low buyer demand are creating conditions that could lead to a drop in home prices this year. authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter at Money who frequently covers news stories about housing topics including home buying, mortgage rates and homeowners insurance. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 600 covers: - Housing - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Katherine Peach role: Associate Editor url: https://money.com/author/katherine-peach/ bio: Katherine Peach is an associate editor with a focus on news and email at Money. She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!) Katherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others. Katherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. She is a member of Phi Beta Kappa. education: University of Maryland, Baltimore County at_money_since: 2025 articles: 14 covers: - Housing - Banking - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Federal Reserve Rate Cuts - Health and Wellness - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes published: '2025-06-02T12:30:00.000Z' section: Housing tags: - News word_count: 502 canonical: https://money.com/home-prices-could-drop-high-rates-low-demand/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo-illustration of a house with an downward arrow](https://img.money.com/2025/05/News-Unexpected-House-Price-Drop.jpg) This spring's housing market is already being characterized as another disappointingly slow season, with home sellers outnumbering buyers by the widest margin since tracking began in 2013 and a majority of people waiting for mortgage rates to fall before considering a move. The number of sellers in the current market exceeds the number of buyers by 33.7% — a significant enough gap to lead to lower prices, according to a new Redfin report. The brokerage uses real estate listing data to track the number sellers, comparing it to an internal metric for buying activity. In 2024, sellers outnumbered buyers by only 6.5%, and two years ago, homebuyers actually outnumbered sellers. Redfin is now [forecasting](https://www.redfin.com/news/sellers-vs-buyers-price-impact/) a 1% drop in home prices by the end of the year, confirming that "the growing imbalance between buyers and sellers is the basis for that prediction." The Redfin report said buyers are gaining the upper hand in negotiations, and if the trend continues, home prices would likely fall. What's deterring prospective buyers? The report cites three main factors: high home prices, economic uncertainty and homeowners feeling locked in to their mortgages. At 6.89% for a 30-year fixed-rate loan, the current average rate is only slightly below year-ago levels. After peaking at 7.79% in October 2023, today's rates are lower, but not by as much as many were hoping. [Home prices](https://www.redfin.com/news/housing-market-update-high-housing-costs-price-relief-in-sight/) are up nearly 20% since 2021. For the four weeks ending May 25, the median sale price was around $394,000, according to Redfin. With [mortgage rates](https://money.com/current-mortgage-rates/) pushing up home ownership costs, the [typical monthly payment](https://www.redfin.com/news/housing-market-update-high-housing-costs-price-relief-in-sight/) on a home is $2,860, only $25 off the record high. ## What prospective homebuyers are waiting for Realtor.com [reports](https://mediaroom.realtor.com/2025-05-29-Millennials-Show-Increased-Interest-in-Buying-a-Home-Despite-High-Mortgage-Rates,-Realtor-com-R-Survey-Finds) that most Americans (63%) say mortgage rates would have to fall below 5% for them to consider buying a home. For current homeowners, it's hard to even think about moving when rates are this high. Homeowners tend to be reluctant to sell when their existing mortgage rates are lower than what they could get from potential lenders. "The lock-in effect is still very much in effect," Laura Eddy, vice president of research and insights at Realtor.com, said in a release. An annual homebuyer report out last week from [Bank of America](https://institute.bankofamerica.com/economic-insights/on-the-move-q1-2025.html) reinforces many of the findings from Redfin and Realtor.com about ongoing housing market challenges and how prospective buyers are responding. "Consumers appear bent on holding off for lower home prices and rates," Bank of America's experts wrote. While Americans haven't stopped dreaming about moving to new homes, many are delaying home purchases due to tough market conditions. The bank's survey data shows that the percentage of people "holding off on buying" is at a three-year high. However, their optimism that the market will improve is also notable: 75% "expect prices and interest rates to fall and are waiting until then to buy a new home," up from 67% a year ago. ## Buy your home with more convenience and less hassle ![View Rates](https://s3.consumersadvocate.org/prd/image/image/38130/medium_29a2a129-cf1d-4fcb-a92d-901b0c9bf0f6.webp) Our Partner [View Rates](https://money.com/go/08e59d2cd3ac?bidid=4074128638&pmeta=p129-c488-u36862&ptid=666809432&ptoken=f5f8107fcbe74c546295e7b3e6f4af61) ![View Rates](https://s3.consumersadvocate.org/prd/image/image/39711/medium_85521de9-b6c5-4b35-a129-169c217d0287.webp) Our Partner [View Rates](https://money.com/go/6dc7aefe0ff9?bidid=4074128641&pmeta=p129-c488-u36862&ptid=666809432&ptoken=089eb97c49467c212815e3f0d5bed514) ![View Rates](https://s3.consumersadvocate.org/prd/image/image/34120/medium_4ba40e39-00f6-4f3e-9a12-67943aa4166f.webp) Our Partner [View Rates](https://money.com/go/6f08c9d0e32b?bidid=4074128639&pmeta=p129-c488-u36862&ptid=666809432&ptoken=7982ce8b21d574f61b5cfbc68ecd4290) ![](https://s3.consumersadvocate.org/prd/image/image/26681/medium_57f09f10-efb8-487d-a73e-5f7d605144eb.png) Imagine finally owning your dream home — Rocket Mortgage (NMLS #3030) can help! [View Rates](https://money.com/pr/t39f99e0e0ab?ap_referrer=%2Fhome-prices-could-drop-high-rates-low-demand%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/home-prices-could-drop-high-rates-low-demand/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Housing", "item": "https://money.com/housing/" }, { "@type": "ListItem", "position": 3, "name": "Home Buying", "item": "https://money.com/home-buying/" }, { "@type": "ListItem", "position": 4, "name": "The Unexpected Reason Home Prices Could Drop Soon" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/home-prices-could-drop-high-rates-low-demand/#webpage", "url": "https://money.com/home-prices-could-drop-high-rates-low-demand/", "name": "The Unexpected Reason Home Prices Could Drop Soon", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2025-06-02T12:30:00.000Z", "mainEntity": { "@id": "https://money.com/home-prices-could-drop-high-rates-low-demand/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/home-prices-could-drop-high-rates-low-demand/#breadcrumb" } }, { "@type": "NewsArticle", "headline": "The Unexpected Reason Home Prices Could Drop Soon", "articleSection": "Housing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2025/05/News-Unexpected-House-Price-Drop.jpg", "width": 2880, "height": 1920, "caption": "News-Unexpected-House-Price-Drop" } ], "author": [ { "@type": "Person", "name": "Pete Grieve", "url": "https://money.com/author/pete-grieve/", "@id": "https://money.com/author/pete-grieve/#author", "description": "Pete Grieve is a personal finance reporter at Money who frequently covers news stories about housing topics including home buying, mortgage rates and homeowners insurance.", "image": "https://img.money.com/2023/02/peter.png?w=350&h=430&crop=1", "email": "peter.grieve@money.com", "jobTitle": "Lead News Reporter", "alumniOf": "University of Chicago, BA Political Science", "sameAs": [ "https://twitter.com/pete_grieve", "https://linkedin.com/in/pete-grieve-b5aa02138", "https://www.facebook.com/petegrieve4" ], "worksFor": { "@id": "https://money.com/#organization" } } ], "publisher": "https://money.com/#organization", "datePublished": "2025-06-02T12:30:00.000Z", "description": "High mortgage rates and low buyer demand are creating conditions that could lead to a drop in home prices this year.", "abstract": "High mortgage rates and low buyer demand are creating conditions that could lead to a drop in home prices this year.", "@id": "https://money.com/home-prices-could-drop-high-rates-low-demand/", "inLanguage": "en-US", "editor": [ { "@type": "Person", "name": "Katherine Peach", "url": "https://money.com/author/katherine-peach/", "@id": "https://money.com/author/katherine-peach/#author", "description": "Katherine Peach is an associate editor with a focus on news and email at Money. 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