Persistently high mortgage rates, rising home prices, and increased economic uncertainty have pushed many potential homebuyers to the sidelines. Nonetheless, a recent survey from Realtor.com showed that millennials are determined to move forward despite these challenges in the market. Almost 25% of millennial participants expressed their intention to purchase a home within the next six months, an increase from only 15% in September 2024. In contrast, only 14% of all respondents have similar plans.

Consistently elevated mortgage rates are maintaining low buyer engagement. A third of those surveyed stated that they have postponed buying a home because of the ongoing high rates, mirroring the sentiment observed last autumn when rates were similar to what they are now.

Younger generations, particularly first-time buyers, are the most impacted by elevated interest rates. Over half of Gen Z participants (55%) and nearly half of millennial participants (47%) indicated they have postponed buying a home because of high mortgage rates, in contrast to only 35% of Gen X and 18% of baby boomers.

When inquired about the mortgage rates needed to make home buying appealing, nearly a third of those surveyed indicated that rates do not influence their buying decisions. Only 2% of participants stated they would consider purchasing a home if rates exceeded 6%, a level that has remained steady since mid-September 2022. A majority of participants (63%) expect interest rates to drop below 5% or even lower before they contemplate making a purchase. Approximately 82% of existing mortgages have rates at 6% or less, highlighting the ongoing difficulties posed by elevated mortgage rates.

To fund the purchase of a home, the majority of existing homeowners relied on personal savings (57%), while a portion utilized investments or retirement funds (15%). A minor percentage (12%) of homeowners used financial support in the form of gifts or loans from relatives. Interestingly, around 25% of individuals intending to purchase a home within the next six months expect to use their retirement funds.

A recent survey by Realtor.com revealed that 50% of prospective sellers with a mortgage feel "trapped" because of high mortgage rates, reinforcing these findings. The survey indicated that over 75% (78%) of potential sellers believe interest rates will either remain unchanged or rise in the coming year. Among potential sellers anticipating rising rates, 43% believe this expectation makes them more likely to sell, while 20% feel that an increase in rates would reduce their inclination to sell. Conversely, 69% of potential sellers who expect rates to drop indicate that this belief boosts their likelihood to sell. This indicates that fluctuations in interest rates influence potential sellers' motivation and their chances of putting their properties on the market.