Mortgage rates have fallen below 7% for the first time in four months, offering a glimmer of hope for the beleaguered housing market.
Trending downward for seven straight weeks, rates have fallen from a high of 7.79% in October, and the average for a 30-year fixed-rate loan fell to 6.95% from 7.03%. Last week, Freddie Mac saying Thursday.
The “sharp and surprising drop in mortgage rates could help lift (the housing market) out of its multifaceted cooling or deep freeze, given the low level of home sales,” said Mark Hamrick, senior economic analyst at Bankrate in an email. . Lower rates “could force some homeowners to put their properties on the market, helping to bolster painfully low inventories,” he added.
“With inflation continuing to slow and the Federal Reserve Board's current expectations that they will lower the federal funds target rate next year, we will likely see a gradual thawing of the housing market in the new year,” Sam Khater, economist head of Freddie Mac. fixed.
The Federal Reserve on Wednesdayand projected a series of cuts in 2023, pushing down 10-year Treasury yields and helping to push mortgage rates down from that peak sooner than expected, said Thomas Ryan, a real estate economist at Capital Economics.
While the scenario appears to set the stage for a recovery in housing market activity in 2024, borrowing costs are unlikely to return to the lows seen in the 2010s, and “the recovery in demand and sales will be slow,” Ryan said in a report. .
Falling mortgage rates and rising incomes will lead to a recovery in housing demand, and the outlook for home buyers will improve in the new year, according to the National Association of Realtors.
The trade organization on Wednesday predicted a 13.5% increase in existing home sales in 2024. The NAR also projects that national median home prices will remain stable again next year, “modestly improving affordability thanks to increased income.”
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