After three years of mortgage rates stuck above 6%, American homebuyers are showing signs of impatience with current borrowing costs as they anxiously await a shift in interest rates that will enable them to move forward with home purchases.
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The latest TurboHome-ResiClub Housing Sentiment Survey, conducted between July 2 and July 23, 2025, revealed that homeowners’ attitudes toward interest rates and home prices are shifting noticeably.
Homeowners Slowly Adjust To Higher Rates
Earlier this year, the idea of locking in a 6% mortgage rate was a nonstarter for most buyers. But now, many are adjusting their expectations.
In the first quarter of 2025, just 41% of homeowners surveyed said they would accept a 6% mortgage rate on their next home purchase. That figure rose to 52% in the most recent survey, showing a growing willingness to engage the market, even if rates don't drop as much as hoped.
This doesn't mean buyers are enthusiastic about current borrowing costs. When asked about the highest mortgage rate they'd be willing to accept, 92% of respondents said they'd go for 4.5%, while 85% were open to 5%, and 66% to 5.5%.
Data points to a strong reservoir of pent-up demand, with buyers clearly more comfortable in the mid-5% range, suggesting that if rates dip closer to that level, the housing market could see a noticeable pickup in activity.
According to the latest Mortgage Bankers Association report, the average contract interest rate for 30-year fixed-rate mortgages only slightly eased from 6.84% to 6.77% in the week ending Aug. 1.
Expectations For Home Price Gains Remain Dire
Beyond rates, home price expectations reflect a more cautious mood.
According to the survey, 55% of homeowners expect housing prices in their local market to either stay flat or decline over the next 12 months. That's a sharp increase from 35% in the first quarter 2025 and shows a softening in near-term optimism.
Yet only 16% of respondents believe prices will drop significantly—by 4% or more—suggesting the market isn't bracing for a crash, but rather a plateau.
This moderation in sentiment aligns with broader economic signals, indicating a cooling labor market and rising inflation in July.
REM ETF Still Reflects Caution
The real estate sector itself hasn't yet priced in a rebound from potentially lower interest rates.
iShares Mortgage Real Estate ETF (NYSE:REM) is still 50% below its pre-COVID highs and has traded mostly flat over the last three years.
The broader Real Estate Select Sector SPDR Fund (NYSE:XLRE) is showing a similar three-year performance, sharply lagging gains made by tech-heavy sectors.
But if mortgage rates drop closer to 5%, a pickup in transaction volume could follow, potentially reviving housing stocks and REITs along the way.
Markets now assign a 93% chance of a 25-basis-point cut in September, according to CME FedWatch data. A back-to-back cut in October is currently priced at a 65% chance.
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