Published by REALTOR.com | November 14, 2024
The share of first-time homebuyers in the housing market has fallen to the lowest level in 43 years, according to recent data from the National Association of Realtors.
Home sales are at multi-decade lows due to high home prices and 7% mortgage rates. Many buyers have been priced out of the market. The share of first-time homebuyers in the housing market has fallen to the lowest level in 43 years, according to recent data from the National Association of Realtors.
Against this backdrop, some buyers might be looking forward to lower mortgage rates as one way to improve their chances of buying a house.
And the key to lower mortgage rates could be in billionaire Elon Musk’s hands, the NAR’s chief economist Lawrence Yun said Wednesday in a statement after the release of the latest inflation data.
The Federal Reserve started raising its benchmark rate in 2022 to address rampant inflation in the U.S. economy. Mortgage rates don’t directly follow the direction of the federal funds rate; they tend to rise and fall in tandem with the yield on the 10-year Treasury note, which tends to anticipate what the Fed will do next.
But with inflation remaining higher than the Fed’s desired 2% target, it’s unclear how the Fed will proceed on interest-rate policy in the coming months.
Financial markets are also concerned about President-elect Donald Trump’s proposed tariffs, which could raise consumer prices. All that worry has pushed the 30-year mortgage rate up over 7% as of Nov. 13, according to a daily survey run by Mortgage News Daily.
While the White House and politicians don’t control the Federal Reserve, Yun said that one way the government can address high mortgage rates is to address the federal deficit.
“Tariffs can be inflationary in the short term, and budget deficits can push mortgage rates up,” Yun said. “Given that tax increases appear unlikely under President Trump, meaningful cuts in government spending are required to control the deficit. Let’s see what Elon Musk can do in the newly created role.”
Trump on Tuesday appointed Musk and onetime Republican presidential candidate Vivek Ramaswamy to co-lead what is being called the “Department of Government Efficiency,” tasked with eliminating government bureaucracy. The two billionaires’ positions do not hinge on congressional approval.
