Mortgage Rate Outlook Revisions
At press time, 30-year fixed-rate mortgages were at or near 6.8%, still too close to the 7% range for some. Is it an indicator that a housing market recovery may work more slowly than anticipated?
Time will tell, but multiple sources report Fannie Mae revising its mortgage rate outlook for 2024 from the 5.9% rate predicted earlier. Fannie Mae now expects rates to hit an average of 6.4% by the end of 2024.
Does this mean that a housing recovery is NOT happening? Not exactly.
Fed Actions on Interest Rates
There are multiple reasons why mortgage loan interest rates may fall slower than some might like. One of those reasons? Fed lending policy. The Federal Reserve has declined to hike rates further, noting signs of a financial recovery. But the Fed is not actively cutting rates at press time, either.
The Fed's less-aggressive stance is paired with better-than-hoped-for inflation stats, which slow the return to lower mortgage rates. And those feeling market enthusiasm are still taking a wait-and-see approach, which some feel adds more “drag” to the recovery.
Fannie Mae Predicts More Home Sales in 2024
The Fannie Mae predictions about a slower recovery (interest rate-wise) don’t mean house hunters are holding their breath and waiting. According to Fannie Mae sources, well over half the homeowners surveyed believe 2024 is a good time to try to sell a house.
Although interest may not be massive compared to hot housing markets in the past, there is an expected “increase in the level” of home sales compared to the previous year.
Some sources note that some home sales jumped as high as 10% in the first quarter of 2024 (during February), and new house hunters may have to compete more this year against experienced house hunters.
Some may be using the equity in their current homes as a way into a new purchase.
The Outlook for the Rest of 2024
You guessed it, the outlook for the remainder of the year (as viewed from the first quarter of 2024) is fairly up in the air. Will there be a recovery? Since the Fed seems disinclined to hike rates and housing inventory further, some believe the market may be on the rise later in the year.
Will the recovery go as far as house hunters want? Likely not, but any step toward lower rates and more houses for sale is in the right direction.
Then, there are the variables we can’t account for at press time, such as breaking financial news, world events, political change, and investor enthusiasm.
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