Compass CEO Robert Reffkin said in a CNBC interview last week that homebuyers are adapting to higher mortgage rates amid signs the housing market may have bottomed out. His comments follow October’s existing home sales data, which showed the annual increase in over three years, up 2.9% year over year.

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Despite the uptick, transaction volume remains well below normal levels. “The average transaction volume in the last two years has been just above four million when it should be above five million,” Reffkin said, pointing to about three million transactions of pent-up demand. “I think there are a lot of reasons we go higher,” he said, adding that “you can only hold back life events for so long.”

While current 7% mortgage rates exceed comfortable buying levels, Reffkin sees improvement from last year’s 8.2% peak. He told CNBC that rates below 6% would signal a return to normal market conditions, though even a brief period at that level could catalyze significant activity. “Give me 5.999% for not a day but for a couple of months and we will be very close to mid-cycle,” he said.

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Looking ahead, Reffkin cited historical patterns suggesting potential market improvement. “The year following 10 of the last 11 presidential elections, transaction volume and prices increased,” he explained, attributing it to buyers postponing purchases during election years.

He said housing inventory has increased 20% year-over-year nationwide, though it still requires another 30% growth to reach pre-pandemic levels. Luxury markets show particular strength, with Reffkin noting wealthy buyers benefit from higher interest rates through investment income while remaining insulated from mortgage costs.

First-time buyers face continuing challenges, with the average buyer age now 56 compared to previous averages in the 20s. “First-time buyers are getting hit because of affordability. And affordability is an issue because there’s not enough inventory,” Reffkin explained.

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In response, Compass has launched several initiatives to increase inventory, including programs that eliminate concerns about days-on-market statistics and price reduction histories.

His outlook aligns with that of other industry leaders, including Home Depot and Lowe’s executives, who believe housing turnover has likely decreased. “I think that we can’t go much lower,” Reffkin said. “There’s no sign in recent history of going much below four million and we’ve been at that level now for the last two years.”

Regarding recent industry changes around broker fees, Reffkin expressed some optimism. “Of all the reports that are out there, no one is saying that there’s a significant change in commissions,” he told CNBC, indicating minimal market impact so far.

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