Published by REALTOR | August 14, 2024
The next six months should bring some welcome relief to homebuyers and sellers in the form of lower mortgage rates, according to the Realtor.com® midyear housing forecast for 2024.
So far, 2024 has been a tough year for the housing market with high mortgage rates, stubborn home prices, and sluggish sales—but things might be finally looking up.
The next six months should bring some welcome relief to homebuyers and sellers in the form of lower mortgage rates, according to the Realtor.com® midyear housing forecast for 2024.
Rates for a 30-year fixed home loan have already plunged to 6.47% for the week ending Aug. 8, according to Freddie Mac. That’s the lowest they’ve been in over a year.
And they could fall even further, with Realtor.com economists predicting a rate of 6.3% by the end of 2024.
“Economic signals suggest that the Fed should begin cutting its federal funds rate in 2024,” says Realtor.com Chief Economist Danielle Hale. This decrease is “long-awaited mortgage rate relief.”
The Federal Reserve has kept its benchmark borrowing rates high for years in an effort to tame inflation, but it has signaled a rate cut could be coming next month.
Recent data, including July’s jobs report, showed that unemployment was rising. This provides “evidence that Fed policy is working—perhaps working overtime—and a rate cut, even a large one, may be appropriate,” says Hale.
While mortgage rates don’t follow the Fed rates exactly, the two tend to move in the same direction. Any cuts to Fed rates should eventually help mortgage rates tumble, too.
“Although the Fed has not yet lowered rates this year, we expect it to do so beginning in September,” adds Hale. “We are going to see Fed rate cuts before the end of 2024, and they’re going to be bigger than we expected at the outset of the year.”
One point of frustration for homebuyers struggling with high mortgage rates is that home prices have remained high this year, too.
“Despite elevated mortgage rates, rising inventory, and homes sitting on the market longer, prices continue to rise,” explains Hale.
As a result, the Realtor.com economics team expects prices to rise by 4.6% by the end of the year.
