Barbara Corcoran Predicts Housing Frenzy Below 5%

In a move to combat escalating inflation and soaring mortgage rates, the Federal Reserve implemented interest rate cuts in September. This action has seen 30-year mortgage rates decline into the low 6% range, a significant drop from the near 7% peak earlier in the year. These reductions have fostered optimism among many economists regarding the housing market's trajectory heading into the final quarter of 2025.

Real estate mogul Barbara Corcoran echoed this sentiment, suggesting that a mortgage rate "with a 5% in front of it" would invigorate the market and prompt hesitant buyers. She highlighted that historically low rates, coupled with increased property taxes, have priced out many, particularly the baby boomer generation, and deterred first-time homebuyers. The current market faces a stagnation in sales despite new construction, creating an imbalance with too many sellers and insufficient buyers.

Despite Corcoran's prediction of a buying surge if rates reach 5%, economists maintain a cautious outlook. Projections indicate that achieving a 5% fixed mortgage rate remains a distant goal within the next five years, influenced by the current economic climate and government policies. The shrinking percentage of first-time homebuyers, now at only 21% of the market, underscores the need for lower rates to improve accessibility.