The latest data from the National Association of Realtors (NAR) shows that existing home sales in the United States increased by 3.4% month-on-month in October and by 2.9% year-on-year, marking the first year-on-year growth since July 2021.

Meanwhile, the latest data from Freddie Mac, a major mortgage financing company, indicates that the average rate for a 30-year standard fixed mortgage in the United States has climbed back to 6.84%, reaching a four-month high.

With mortgage rates remaining high, can the thaw in existing home sales continue, or is it just a flash in the pan?

Several U.S. real estate agents believe that interest rate fluctuations are a crucial factor in determining home-buying behavior. However, the demand for improved housing is more affected, while the demand for owner-occupied housing still exists. There is still a certain wait-and-see sentiment among both buyers and sellers, and the market trend may change next spring.

The era of 2% mortgage rates is gone

Over the past three years, the average mortgage rate has more than doubled. On August 19, 2021, the average 30-year fixed rate was 2.86%. As of November 21, the rate stands at 6.84%. Despite the Federal Reserve's rate cut in September, U.S. mortgage rates did not fall as expected but continued to rise.

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Ansari, co-founder and CEO of global property technology company Juwai IQI Group, explained: "U.S. mortgage rates closely follow the yield on 10-year Treasury bonds. The yield on U.S. Treasury bonds has been rising recently because the market believes that the U.S. economy is strong, and the elected government's tax cuts and tariff policies may also mean an increase in fiscal deficits and inflation."

Data shows that the yield on U.S. 10-year Treasury bonds has soared from 3.62% on September 26 to the current 4.41%.

Three days after the results were announced, U.S. real estate trading platform Redfin raised its forecast for the average 30-year mortgage rate in 2025 to 6.8%. Moody's Analytics and Capital Economics also expect the rate to remain around 7% next year. The Oxford Economics Institute also predicts that although Treasury bond rates have stabilized, given the risk of stronger-than-expected economic growth, the risk of the Federal Reserve slowing the pace of rate cuts, and the risk of the incoming government implementing inflationary policies on tariffs and immigration, the institute still believes that rates face upward risks.

Chen Hongming, deputy general manager of Evergreen Real Estate in Washington, D.C., predicted to First Financial Daily: "The loan rate may remain around 6% in the short term, and if there is a change, it may have to wait until the beginning of next year. Over the past month, due to the rise in interest rates again, most of our buyers are in a wait-and-see state, and the market has not changed much."

"In the short term, mortgage rates are unlikely to return to the 2% level at the beginning of the pandemic. Bank loan rates are influenced by too many factors, and U.S. inflation concerns are a stone in the hearts of investors that has not yet fallen to the ground." Ansari believes that since most U.S. homeowners have mortgage rates around 4%, mortgage rates need to drop to 5% to motivate homeowners to list and promote real estate transactions.

The most depressed period may have passed

Although mortgage rates have risen for four consecutive weeks, mortgage application volumes have increased for the second consecutive week, after two months of decline. According to the latest data from the Mortgage Bankers Association (MBA), in the week ending November 15, mortgage application volumes increased by 1.7% compared to the previous week.

The supply of houses has also increased. In October, the supply of homes for sale reached 1.37 million units, a year-on-year increase of 19.1%. However, the increase in supply also reflects to some extent the longer time homes stay on the market, rather than an increase in the number of listings. According to NAR data, the average time properties stayed on the market in October was 29 days, higher than 28 days in September and 23 days in October 2023. Based on the sales rate of the month, the available inventory is equivalent to a 4.2-month supply, slightly lower than the 4.3 months in September, but still far below the 6-month balance level.

Becco Zou, a broker at Compass's Kirkland branch in Seattle, said: "On the seller side, due to uncertainty about the future trend of the market, many people have postponed their listing plans and are expected to relist next spring, as spring is traditionally the peak season for home buying."

NAR Chief Economist Lawrence Yun analyzed: "The most depressed period for home sales may have passed, and the increase in inventory will bring more transactions. The increase in job positions and the continued growth of the economy seem to be guaranteed, which will lead to an increase in housing demand. However, for most first-time homebuyers, mortgage loans are crucial. Although mortgage rates are still high, they are expected to stabilize."

Ansari believes that in the current market environment, the best strategy for buyers is to "adapt and accept the new normal of high interest rates," so they may choose to buy properties first, and then reduce costs through refinancing if mortgage rates are reduced in the future. Otherwise, once interest rates fall, a large influx of buyers into the market may push up housing prices again.

Chen Hongming also said: "Generally, we advise buyers not to delay home purchase decisions because of waiting for interest rate changes. Home purchases should be based on their own needs and housing conditions. If it is a home for personal use, it is recommended to start as soon as possible; for investment properties, more consideration should be given to the investment return rate of the house."

Becco Zou observed that first-time homebuyers with urgent needs will still choose to buy a house, but most of the buyers who are changing houses are currently in a wait-and-see state. "Buyers whose main demand is to change houses are more particular about location and school districts. In some areas, houses with good comprehensive conditions still need to compete to be purchased," she said.