Published by Forbes.com | January 5, 2024
Falling mortgage rates will make it easier to buy homes this year, economists say.
Economists predict the real estate market will recover in 2024 after a spike in mortgage rates and a shortage of properties sent sales tumbling to a 28-year low in 2023.
Home sales likely will climb 14% this year, according to Lawrence Yun, chief economist of the National Association of Realtors. That would be the biggest annual gain in more than four decades, according to NAR data.
Lower mortgage rates in 2024 — NAR is predicting the average will be 6.3% by the fourth quarter, down from 7.8% in 2023’s final three months — will entice more owners to give up the super-low rates they got during the pandemic and put their homes on the market, Yun said. That will cause the inventory of properties for sale to climb about 30% from 2023’s all-time low, he said.
“There is pent-up demand among sellers that will be unlocked as rates move lower,” Yun said in an interview. “All the families with newborn babies, or new marriages, or divorces, have been waiting for rates to come down to move to something that suits them better.”
Wells Fargo economists have a rosier outlook than NAR, predicting the average 30-year fixed rate will fall to 6% by the end of 2024, close to the Mortgage Bankers Association’s forecast of 6.1%. Fannie Mae, the largest mortgage financier, has the least optimistic outlook of the major forecasters, predicting the average will be 6.5% by the end of the year.
While those rates are a far cry from the historic lows of 2020 and 2021, when people were able to buy homes or refinance mortgages with rates in the 2s and 3s, the sharp run-up into the high 7s as the Federal Reserve battled inflation has made rates in the 6s more acceptable, Fannie Mae economists said last month.
