Most Home Buyers Won’t Budge Until Mortgage Rates Drop to 4%, CNET Survey Finds

Key Findings

Only 4% American adults would realistically consider purchasing a home at a 6% mortgage rate. But if mortgage rates fall to 4% or lower, half would consider this.
About three out of ten (29%) U.S. adults say there is no mortgage rate that would allow them to realistically consider purchasing a home or refinancing.
In addition to mortgage rates, 45% Americans say lower home prices will play a role in their decision to buy a home.
More than half (53%) of U.S. adults have experienced some kind of barrier to purchasing a home outside of the housing market in recent years, with 36% citing inflation as a major factor.

A recent CNET poll found that half of American adults say lower mortgage rates will make them think realistically about buying a home. If average mortgage rates fall to 4% or lower, that rate could potentially unlock the housing market.

Except that favorable mortgage rates are unlikely in the near future. Experts say it would take a severe economic downturn for mortgage rates to reach the record lows we’ve seen during the pandemic.

After peaking above 8% in late 2023, average mortgage rates hovered in the mid-6% range for some time. They could fall nearly 6% by the end of the year, but that still won’t be enough to distract buyers. Only 4% of US adults would actually consider buying a home or refinancing a mortgage at a 6% rate.

Now that the Federal Reserve has begun cutting its benchmark interest rate, there’s a chance we’ll see mortgage rates drop by one percentage point or more next year. However, even then, a CNET poll found that only 9% of US adults would consider buying a home or refinancing at a 5% rate.

Today’s housing affordability crisis goes beyond just high mortgage rates. Home buyers, as well as homeowners looking to refinance existing mortgages, are looking for relief from rising home prices and the overall high cost of living.

Good news despite limited optimism

A CNET poll found that 40% of U.S. adults are either somewhat or extremely pessimistic about mortgage rates becoming affordable by the end of this year. In 2023, housing affordability reached its lowest point in nearly 40 years.

In the long term, however, there are some reasons for optimism. Now that inflation has dropped significantly, the Fed made its first interest rate cut since 2020 at its September Federal Open Market Committee meeting. The central bank is likely to cut rates further over the next 18 months.

The Fed’s pivot to gradual, slow rate cuts – after aggressively raising interest rates throughout 2022 and 2023 – marks a turning point for the housing market, which is especially sensitive to rising borrowing rates. Mortgage rates are expected to fall, but it won’t be linear or rapid.

Factors influencing housing affordability

The expensive mortgage market isn’t the only obstacle for homebuyers. Rising home prices and limited inventory are also making homeownership unaffordable and widening the generational wealth gap.

Nearly half (45%) of American adults say lower home prices will also impact their financial decision to buy a home. Since 2020, home prices have risen more than 40%, which is also making it difficult for potential buyers to save up for a large enough down payment.

In addition to lower home prices, 31% of survey respondents said that rising wages or salary increases would have a significant impact on their decision to buy a home. When the cost of living rises and wages lag, it makes it harder for people to save money for other expenses associated with home ownership, such as insurance.

The main obstacles to buying a home

More than a third (36%) of Americans said inflation and/or the high cost of consumer goods and services were the biggest obstacles to buying a home. Inflation has led to rising prices for basic goods and services, reducing the value of the dollar and reducing the purchasing power of consumers.

Bottom line

Both weaker inflation and lower interest rates from the central bank should lead to lower borrowing costs for mortgages. This does not make up for today’s high home prices and limited supply of homes for sale. But it is a step in the right direction for millions of Americans who have been priced out of the housing market.

Lower interest rates will encourage more homeowners to put their properties on the market, allow home developers to finance more construction and make it easier for potential buyers, especially first-time buyers, to get their foot in the door of a new home.

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Methodology: All figures, unless otherwise stated, are taken from YouGov Plc. The total sample size was 2368 adults. Fieldwork took place August 19–21, 2024. The survey was conducted online. Figures are weighted and representative of the entire US adult population (ages 18+).