Looming US recession will give hope to first-time homebuyers, expert says

First-time homebuyers may eventually get their big break, but an economic expert says it will not take place until after a recession.

During an appearance on "Varney & Co." Tuesday, Thru the Cycle President and experienced economic forecaster John Lonski said that first-time buyers may be able to buy after the next recession, which "may not be that far away."

"You know, the recession could start as early as this October. But I would imagine that it’s going to pop up at some point within the next 12 months. That’s the first step to getting home prices lower," Lonski suggested.

He told host Stuart Varney that we "have to bring home prices down" and that the industry may go through a period of home price deflation.

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Mortgage buyer Freddie Mac said Thursday that the average rate on a 30-year loan tumbled to 6.47%, the lowest level in more than a year. While that is down from a peak of 7.79% in the fall, it remains sharply higher than the pandemic-era lows of just 3%.

"Of course, with a recession, you'll be looking at a much lower 10-year yield. I think the 10-year yield following the next recession will go down to 2.5%, which is this average. That's just its average of 2017, 2019. And that would equate to about a 4.2% 30-year mortgage," Lonski said.

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The expert went on to add that the 10-year yield has to approach 3% to make housing affordable.

"This economy is in need of a correction," Lonski stressed. 

"Perhaps part of this correction will be a change in leadership in Washington come this November," he said.

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FOX Business’ Megan Henney contributed to this report