--- title: Falling Mortgage Rates Could Actually Push Home Prices Up, Says Former FHA Commissioner description: Former FHA Commissioner Frank Cassidy tells Money that low mortgage rates won't fix the housing affordability crisis. Here's what will. authors: - name: Leslie Cook role: Editor, Real Estate url: https://money.com/author/leslie-cook/ bio: Leslie Cook is Money’s lead real estate editor covering trends in the housing market, mortgage rates and real estate. She also writes about home renovation trends and tips. education: Bryn Mawr College, BA History certifications: Certified Personal Finance Counselor at_money_since: 2019 articles: 800 covers: - Mortgages - Banking - Credit - Economy and Politics - Housing - Identity Theft - Insurance - Loans - Personal Finance - Professional Services - Retirement - Taxes social: - https://twitter.com/LeslieLCook - https://www.linkedin.com/in/leslie-cook-9829b9198/ editors: - name: Julia Glum role: Managing Editor url: https://money.com/author/julia-glum/ bio: Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. education: University of Florida at_money_since: 2018 articles: 454 covers: - Mortgages - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - Newsweek - International Business Times - CBS News - Good Morning America - WUSA9 - Pix 11 - The New York Times - Mashable - The Washington Post - CNBC - Politico social: - https://x.com/superjulia - https://www.linkedin.com/in/julia-glum published: '2026-11-13T11:49:51.000Z' section: Mortgages tags: - News word_count: 636 canonical: https://money.com/lower-mortgage-rates-higher-home-prices/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We may earn a fee if you click on the links below. Compensation does not determine ranking. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![House on rat trap](https://img.money.com/2026/11/News-Mortgage-rate-trap.jpg) Would-be homebuyers frustrated by how hard it is to buy a home may be crossing their fingers for lower rates, but a significant drop could have an unwelcome side effect. Mortgage rates often sit at the center of conversations about improving housing affordability because lower rates get buyers off the sidelines and give them more purchasing power. We saw this happen as recently as February, when the average rate on a 30-year loan briefly dropped below 6%. But in an interview with Money, Frank Cassidy — who served as Federal Housing Administration commissioner from January to June of this year — says that high [mortgage rates](https://money.com/current-mortgage-rates/?apxa1=homepage) are just one part of the equation. "Lowering interest rates does not solve the fundamental problem of a supply-demand imbalance," he says. "\[It's\] not a long-term housing affordability fix." The U.S. has an estimated housing deficit, or gap between the number of homes for sale and the number of prospective buyers, of 3 to 5 million. This lack of supply, combined with high interest rates, has led to a third consecutive year of below-average home sales, according to data from the National Association of Realtors. [Existing home sales](https://www.nar.realtor/newsroom/existing-home-sales-decreased-5-5-percent-october-nar-report) are on track to reach 3.75 million by the end of the year — the lowest sales volume since August 2010 and more than 1 million less than the typical sales volume. This slowdown doesn't mean people have lost interest in buying a home, Cassidy says. It just means they've postponed their search. ## Why home prices could jump when mortgage rates fall The current supply deficit stems from two distinct issues, according to Cassidy. The first: Would-be home sellers are locked into their pandemic-era low mortgage rates. According to recent [data](https://www.realtor.com/research/2026-q2-outstanding-mortgage-data/) from Realtor.com, nearly 78% of all outstanding mortgages have a rate below 6%. With current mortgage rates above 7%, homeowners are unlikely to trade their low rates for much higher ones unless they need to move. The second is the lack of new construction. Buying land, obtaining building permits, securing financing and actually building homes takes years. Borrowing costs would improve if rates dropped significantly in a short period of time, but it would also unlock demand for houses that simply don't exist yet. That could cause a new type of pain for buyers. "If demand recovers faster than inventory, prices will absolutely rise," Cassidy says. "We could see significant appreciation within the next six to 12 months in supply-constrained markets." We've already witnessed this dynamic. At the height of the pandemic, mortgage rates averaged below 3%, allowing homebuyers to secure very favorable financing and increase their budgets. The ensuing buying frenzy, combined with the lack of homes for sale, resulted in a surge in bidding wars that pushed home prices up by as much as 50% in some cities. Today's market is different, but Cassidy says that in places where inventory is already limited, such as the Northeast, home values could increase by as much as 20%. However, in markets where supply has increased significantly over the past few years, such as Texas, home prices should remain stable, giving prospective homebuyers a better chance at homeownership. The key to preventing a new surge in home prices when mortgage rates *do* fall is to make it easier to build new supply. Cassidy estimates that 20% to 40% of new construction costs stem from regulatory red tape. Streamlining local restrictions like restrictive zoning and multiagency permitting reviews can lower the cost of new homes and cut build times to bring more supply to market faster. In the end, the primary way to make housing more affordable is to produce more of it. "If we don't make it easier, faster, cheaper to build housing, we risk turning today's affordability crisis into tomorrow's bidding wars that just drive prices up and up," Cassidy says. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/lower-mortgage-rates-higher-home-prices/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Mortgages", "item": "https://money.com/mortgages/" }, { "@type": "ListItem", "position": 3, "name": "Mortgage Rates", "item": "https://money.com/mortgage-rates/" }, { "@type": "ListItem", "position": 4, "name": "Falling Mortgage Rates Could Actually Push Home Prices Up, Says Former FHA Commissioner" } ] }, { "@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/lower-mortgage-rates-higher-home-prices/#webpage", "url": "https://money.com/lower-mortgage-rates-higher-home-prices/", "name": "Falling Mortgage Rates Could Actually Push Home Prices Up, Says Former FHA Commissioner", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2026-11-13T11:49:51.000Z", "mainEntity": { "@id": "https://money.com/lower-mortgage-rates-higher-home-prices/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/lower-mortgage-rates-higher-home-prices/#breadcrumb" } }, { "@type": "NewsArticle", "headline": "Falling Mortgage Rates Could Actually Push Home Prices Up, Says Former FHA Commissioner", "articleSection": "Mortgages", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2026/11/News-Mortgage-rate-trap.jpg", "width": 2880, "height": 1920, "caption": "News-Mortgage-rate-trap" } ], "author": [ { "@type": "Person", "name": "Leslie Cook", "url": "https://money.com/author/leslie-cook/", "@id": "https://money.com/author/leslie-cook/#author", "description": "Leslie Cook is Money’s lead real estate editor covering trends in the housing market, mortgage rates and real estate. 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