Will Home Prices Drop This Fall? Lenders Predict Change

Understanding Housing Affordability in the Fall

Housing affordability has always been a concern for many, but with mortgage rates remaining high and inflation showing signs of rising again, it's becoming even more critical for consumers. These trends could potentially reduce buyer demand and lead to lower home prices. However, if conditions improve, demand might increase, pushing prices higher. The question is, what can we expect in the near term?

Experts have shared their insights on what to anticipate regarding housing affordability this fall. Here's a breakdown of their predictions and the steps current homebuyers should consider.

Mortgage Rates: A Key Factor

Mortgage interest rates are one of the most significant factors influencing housing affordability. Mark Worthington, a branch manager and home loan specialist at Churchill Mortgage, emphasizes that any movement in interest rates will directly impact affordability. If rates drop significantly, affordability could improve temporarily. However, as demand increases, prices may rise again, which could negatively affect affordability.

Currently, forecasts suggest that mortgage rates will remain relatively stable. The Mortgage Bankers Association predicts the average 30-year mortgage rate to be around 6.7% by the end of the year, while Fannie Mae expects a slight decrease to 6.4%. Debra Shultz, vice president of lending at CrossCountry Mortgage, notes that the Federal Reserve is expected to delay rate cuts until October 2025, keeping rates steady through the fall.

Stable rates are seen as beneficial for buyers, as they provide a sense of security. Dana Bull, a real estate advisor with Compass in Massachusetts, highlights that stability is preferable to volatility, allowing both buyers and sellers to plan without uncertainty.

Inventory and Its Impact on Affordability

Inventory levels also play a crucial role in determining affordability. When there is a high number of homes for sale, buyers have more options, leading to seller competition and making purchases more affordable. Conversely, limited inventory can drive up prices and reduce affordability.

According to Realtor.com data, for-sale inventory increased by almost 25% between July 2024 and July 2025, reaching its highest level since the pandemic. However, market conditions can vary significantly. Jennifer Beeston, executive vice president of national sales at Guaranteed Rate, notes that the situation is highly dependent on location and price points. For instance, while bidding wars are still prevalent in Seattle, Dallas offers ample inventory for homes under $500,000.

Mortgage rates also influence inventory levels. If rates drop, homeowners with low-interest mortgages may be more inclined to sell their homes and purchase new ones, potentially increasing the supply of available properties.

Home Prices: Stability or Decline?

Nationally, home prices are still growing, albeit at a slower pace. The median home price is currently just under $411,000. According to Shultz, prices are still high, but growth is expected to be modest—around 2 to 3% for the full year, with some markets possibly experiencing slight declines.

Fannie Mae’s forecast indicates a gradual slowdown in price growth through the end of 2026. However, local market conditions will determine the actual outcome. Brandi Wolff, a real estate agent in Denver, suggests that if mortgage rates drop below 6%, there could be increased competition among buyers, potentially driving prices upward. On the other hand, if rates remain steady, prices may see a slight decline.

Challenges for Move-Up Buyers

For those considering selling their current home and purchasing a new one, the process can be complex. With increased inventory and high rates, selling may prove challenging, while buying could be more accessible. However, this depends on the specific market.

Beeston advises move-up buyers to aim for a seller’s market when selling and a buyer’s market when purchasing. If both occur in the same market, adjustments may be necessary. Realtor.com data shows that the typical home spent 58 days on the market in July 2025, up from a year prior, indicating either waning demand or excess inventory.

Wolff emphasizes the importance of accurate pricing when selling. Overpricing can lead to significant price reductions, ultimately affecting profit margins.

Tips for Making Home Buying More Affordable

While forecasts can change, there are steps homebuyers can take to make their purchase more affordable. Monitoring mortgage rates and consulting with a local real estate agent can help stay informed about market trends.

Negotiating seller concessions or a mortgage rate buydown with your lender can also reduce costs. Additionally, being selective about the home you buy—such as choosing a fixer-upper or a home that has been on the market for a while—can offer better value.

Sellers who have listed their homes for over 30 days may be more motivated to negotiate, making them more likely to accept compelling offers.