Where are home prices headed this fall?

(NewsNation) — Homes are lingering on the market amid sluggish buyer demand and the Federal Reserve's latest interest rate hold is unlikely to offer much relief.

High prices and elevated mortgage rates have kept potential home buyers on the sidelines. But the Fed remains focused on its dual mandate — controlling inflation and maximizing employment — and policymakers have been reluctant to cut interest rates amid uncertainty surrounding President Trump's tariffs.

According to a recent Zillow analysis, there are now more homes for sale than at any point since 2019.

Fed Chair Jerome Powell summed up the situation during a news conference July 30: "Activity in the housing sector remains weak."

While not guaranteed, a Fed rate cut might have helped ease mortgage rates, which currently hover around 6.75% for a 30-year fixed-rate loan. That's roughly the same rate as a year ago and more than double the rate at this time in 2021.

Sales of previously occupied U.S. homes slid in June to the slowest pace since last September as the national median sales price rose to an all-time high of $435,300, according to the National Association of Realtors.

"High mortgage rates are causing home sales to remain stuck at cyclical lows," NAR Chief Economist Lawrence Yun said in a statement.

Mortgage rates are expected to move a bit lower later this year, dropping to 6.4% by the end of 2025, according to a recent forecast from Realtor.com.

"Fed rate cuts, which are expected later this year, in a steadier policy environment should help mortgage rates fall, relieving some of the strain on homebuyers," Danielle Hale, chief economist at Realtor.com, said in a statement Wednesday.

But according to a recent analysis, even 6% mortgage rates would still leave homeownership out of reach for most.

Instead, rates would need to drop to 4.43% for a typical home to be affordable for someone making the median income, according to Zillow economic analyst Anushna Prakash. But such a rate drop is unrealistic and would come with its own set of economic trade-offs.

"If buyers are waiting for big drops in mortgage rates or prices to help affordability, they’re in for a rude awakening," Prakash wrote. "Just like falling rates, that kind of correction in house prices won’t happen without a serious slowdown in economic growth and income growth, and a rise in the unemployment rate." 

The typical monthly mortgage payment has skyrocketed in recent years, from about $1,100 in 2020 to double that — $2,207 — in 2024 (not adjusted for inflation), according to Bankrate. Adjusted for inflation, the increase still works out to almost an additional $800 a month.

With interest rates high — and unlikely to come down quickly — consumers should focus on aggressively paying down high-cost debt and padding emergency savings, Greg McBride, Bankrate's chief financial analyst, said in an email Wednesday.

"Those with less debt and more savings will be best positioned to weather whatever the economy throws at us in the months ahead," McBride said.

Realtor.com expects home sales in the second half of 2025 to resemble the modest spring season, which was one of the slowest in years.

One silver lining: as buyers gain more options, home prices are expected to rise more slowly than they did in 2024.

In some regions, home prices have even declined and as inventory climbs, sellers are showing a greater willingness to negotiate.