Inventory isn't going to be "back to normal" for a long time to come.  

Zoning and permitting costs are enormous in many areas that need more homes, and builders are careful about not going too far into the spec space like they did in 2006.

Household formations are expected to exceed 2M for the foreseeable future while inventory and permitting are showing north of 1M new homes 

Reduced rates will bring more buyers to market, but the question then becomes how many will have the funds/means to afford the still-high payments and the additional costs should bidding wars become the norm once again.

Mirror Mirror on the Wall 

Where the Hell is my crystal Ball? 

Inventory remains low in Silicon Valley. 

Buyers are still buying - homes are selling. 

As for the debt crisis, I am not an economist, yet my sense is that it will impact many things. 

Our inventory is still very low. That has been the case for a long time. Rate increases have not driven a large increase in listings. Rates have come down some as I write this. They may come done some more but those who are thinking the will drop to the range below 4% are mistaken. I do not expect to see rates as low a 5% and not in the near future. Lower rates may stimulate more buyers who will then have to compete for the available homes for sale. Results...multiple offers and more price increases in a market that is already challenging due to affordability in th San Francisco Bay Area.

When will we see a more "normal" inventory level? I am not sure that I can tell you what a "normal" inventory level is these days or will be in the future.

IDK . . . Fannie Mae says a very small adjustment if any . . . SBA is in the stratosphere . . . and most of our buyers are cash (I do mainly commercial/industrial) . . .
We have very low inventory BUT I am seeing as of today (residential) 75 new, 21 back on market so deals are not closing! And 54 price drop.
Residential market is correcting here . . . that may bring some buyers in if sellers start to reduce prices 'enough' to offset the higher interest rates . . . 

Rate WILL lower in 2024 and 2025.
But, no, inventory is never returning to "normal" in those same 2 years. I'm standing by "never". Which is why by Spring 2025, the market will be INSANE again!

We still have buyers and low inventory, so not really.

Lower rates may or may not come back too soon. If they did, it would first shake out the sellers in that they would be more inclined to sell if they could afford to buy, so there would be more activity all around. 

Interest rates (high or low) have not been the driving force behind the market over the last several years, and that includes the latest rises in rates.

The market in our area is still moving quickly... inventory is low, and we are still experiencing multiple offers and bids over list price.  So we're not waiting for them to come back.  They've never left.

This is the new normal and buyers and sellers are still in need of housing. 

No. We have a severe shortage of affordable homes in our area.

It may take years, (if at all), for interest rates to come down. As far as the little pockets of Real Estate all over the U.S., there will always be local activities

Everything has seemed normal to me, it's just all of the talk that makes things seem not normal, haha.  Of course, if interest rates continue to decrease it's going to allow more people to purchase homes and I am sure that they will.

The downtown Chicago condo market will likely still see activity at the higher end regardless of rates and politics. As for the rest of the market who knows? 

Hello Philip A. Raices  reduced rates can bring purchasers back into market.

We've been short on inventory in the Charlotte area for at least 5-6 years. I don't see a big increase any time soon. Serious buyers remain in the market. If rates go down, there will be more competition for still a small number of homes driving prices further up... net, net the buyer has achieved nothing.

Well, we're going to be low on inventory for a while. There are a lot of companies moving their headquarters here. Apple will finally start building their East Coast headquarters here in 2026. 

As long as these national rental companies are hoarding all of the "affordable" housing options, I do not believe buyers will have any more or less luck than they have been facing. Due to these companies holding and sitting on properties, we will experience this for quite some time. It only helps the property owners that are looking to sell, as their values are going to be higher since there is less churn in the market. 

People are struggling, over spending and running up credit card debt.  I feel it will be a long time coming before the market is great again.  But we still have some cash buyers in the market.

I think the interest rate is here to stay for at least ten years.  I think we will see some relief on the housing shortage if the bill passes through Washington that makes hedge funds sell their single-family rentals.  I also think the builders need to look at what the market needs, little houses were good for the short term but I see blended families that want a yard and more square footage for a reasonable price.

Interest rate drop won't make too much difference. Inventory isn't as bad as some try to make you think. There are numerous new construction homes in progress around here, and none of them are listed in the mls. I also know several builders sitting on lots and just doing custom builds for buyers. Others are in the progress of assembling lots with plan to change type of subdivisions that will allow for more homes.

Many will come back and there will be another (continued) wave of market craziness. 

The interest rates are not the deciding factor when your buyer is cash. Look Mom, no bank. Inventory being low and scooped up as soon as it hits the MLS conveyor belt continues.

In my opinion, it is not the rates solely. We have a serious lack of inventory and one of the reasons for that is prices. Wages have not kept up with price increases.  If I was looking to buy I wait and wait for the market to hit its normal down cycle and be ready to pounce. 

I second what John Juarez said.  Lower rates = more competition = higher sales prices.

I am retired Philip A. Raices so I no longer have my fingers on the pulse of our Real Estate market BUT our market has remained very stable for decades with a slight bit of madness during our oil boom as well as when a flood destroyed a forth of our homes. I don't think a slight dip in interest rates (if it were to happen) would change our market what so ever.

I dont think that it makes that much difference.

I don't think lowering the interest rate will get many more people qualified to purchase a home but it will give those that are qualified the confidence to buy one.  The belief in a better future is that motivating factor that iginites action.

We have been experiencing low inventory for 4+ years now and the rates are not stopping the buyers from purchasing.  The low inventory is still causing buyers to overpay and we are still seeing multiple offers competing ... the lowering of the rates will not likely change anything much.  Sellers are still not willing to sell and then buy at the higher rates.

When interest rates are reduced it will not allow the "majority of purchasers" to buy, inventory is going to remain a factor for some time to come. those who are serious will find a way, those who are not will find an excuse.

Happy Days are here again