Agents Say Mortgage Rates Below 5.5% Key to Unlocking Market Growth in 2025

TORONTO & NEW YORK, October 29, 2024--(BUSINESS WIRE)--The Real Brokerage Inc. (NASDAQ: REAX, "Real"), a technology platform reshaping real estate for agents, home buyers and sellers, today released results from its September 2024 Agent Survey. With responses from agents across North America, the survey reveals growing optimism about the next 12 months, despite challenges posed by recent mortgage rate volatility and the upcoming U.S. presidential election. Agents continue to cite affordability and inventory as the biggest challenges for buyers.

"Although agents are optimistic that mortgage rates below the mid-5% range could unlock market growth, we’re not sitting back waiting for a recovery," said Tamir Poleg, Chairman and CEO of Real. "We are continuing to play offense and working to deliver differentiated results in this environment by empowering agents with the tools to help them succeed today."

"Affordability remains the biggest challenge for buyers," said Sharran Srivatsaa, President of Real. "Given the Fed’s rate-cut path remains uncertain, Real remains focused on developing tools, training, and technology that help our agents serve their clients effectively, no matter the market conditions."

Key Survey Findings: Agent Insights on Upcoming Presidential Election

• Election Uncertainty Delays Buyer Activity: Seventy-four percent (74%) of agents reported that election uncertainty is causing some clients to delay home buying or selling decisions until after the election. Eighteen percent (18%) said the election is not influencing decisions, while 8% were unsure.

• Housing Policy a Focus for Voters: Twenty-six percent (26%) of agents believe housing policy will be a major issue in the election, while 35% expect it to play a minor role. Nineteen percent (19%) believe housing policy will not be a significant factor for voters, and 21% were uncertain.

• Mixed Sentiment on Home Prices Post-Election: When asked whether clients had expressed concerns about the election’s impact on home prices, 18.5% of agents reported clients are optimistic that prices may rise, while 24% are concerned prices could fall. Thirty-six percent (36%) said buyers and sellers are not focused on election-related concerns, and 21% reported mixed or uncertain responses.

Key Survey Findings: Market Trends and Insights

• Agent Optimism Index Improves in September: Agents were asked, "Compared to one month ago, are you more optimistic or pessimistic about the outlook for your primary market over the next 12 months?". Forty-six percent (46%) felt more optimistic, with an additional 18% feeling significantly more optimistic. This outweighed the 9% feeling more pessimistic and 2% significantly more pessimistic, while 24% remained neutral.
  The weighted Agent Optimism Index rose to 67.0, up from 59.3 in August, with scores above 50 indicating a net positive outlook. Agent optimism improved across both the U.S. and Canada.

• Market Remains Balanced as Buyer Power Increases: When asked whether their market was a buyer’s or seller’s market, 38% of agents identified a seller’s market, down from 41% in August. Forty percent (40%) said their market was balanced, largely consistent with 39% in August, while the share of agents reporting a buyer’s market increased to 23%, up from 20%.

• Affordability and Inventory Remain Key Challenges: Affordability remains the top concern for prospective home buyers. Forty-eight percent of agents identified affordability/mortgage rates as the top challenge for prospective home buyers, down from 53% in August, likely the result of the easing of mortgage rates in September. Lack of inventory rose to 22% of respondents, up from 20%; economic uncertainty increased to 20%, from 18% in August; and buyer competition inched up to 6% from 5% in August.

• North American Industry Transactions Show Modest Improvement, Though Continue Downward Trend: Agents reported a year-over-year decline in industry home sale transactions in September. The Transaction Growth Index increased to 46.6, up from 41.6 in August, signaling progress but still indicating contraction as it remains below 50. This aligns with the 3.5% year-over-year decline in September existing home sales reported by the National Association of Realtors (NAR).

• Lower Mortgage Rates Needed to Unlock Growth: Agents were asked what mortgage rate would drive a 10% or more increase in home sales in 2025 compared to 2024. The responses indicate that further reductions from current levels would be necessary to stimulate meaningful market growth:

  • 3% of agents believe that current mortgage rates between 6.0% to 6.5% would be sufficient to generate a 10% or more increase in sales.

  • 18% expect that rates easing to 5.5% to 6.0% could drive this level of growth.

  • 46% of agents say that rates between 5.0% to 5.5% would be sufficient to unlock a meaningful (10% or greater) increase in sales.

  • 24% believe mortgage rates between 4.5% to 5.0%, would be required.

  • 5% of agents think that only a significant drop below 4.5% would unlock a 10% or more increase in sales activity.