National Housing & Economic Forecast 2024 Midyear Update: Mortgage Rate Relief Finally Arrives

Overview

The long-awaited relief in mortgage rates is finally here. Economic signals suggest that the Federal Reserve will start cutting its Federal Funds rate in 2024. This update brings good news for both home buyers and sellers.

Mortgage Rates

  • Current Forecast: Average mortgage rates are expected to be 6.7% throughout the year, dropping to 6.3% by year-end.
  • Previous Forecast: Rates were expected to average 6.8% and end the year at 6.5%.

Home Prices

  • Revised Forecast: Home prices are now expected to grow by 4.6% in 2024, a significant increase from the previously forecasted decline of 1.7%.
  • Reason: The U.S. economy has shown resilience despite higher interest rates.

Home Sales

  • Expected Increase: Home sales are projected to rise by 0.8% in 2024, totaling 4.1 million sales. This is a slight increase from the initial forecast but still the second-lowest annual total since 2012.

Inventory

  • Inventory Growth: Inventory levels are expected to increase by 14.5%, a substantial revision from the previously forecasted decline of 14%.
  • Impact: More homes on the market could provide more options for buyers and potentially stabilize prices.

Economic Landscape

  • Inflation and Fed Policy: Inflation has been slowly subsiding, and the Fed is expected to start cutting rates by September 2024. This could further ease mortgage rates and make home buying more affordable.
  • Employment Trends: Slower job growth and rising unemployment indicate that the Fed’s policies are working, which may lead to rate cuts.

Key Takeaways for Buyers

  • Lower Mortgage Rates: With rates expected to drop, it might be a good time to lock in a mortgage.
  • More Inventory: Increased inventory means more choices and potentially better deals.

Key Takeaways for Sellers

  • Price Growth: Home prices are expected to rise, making it a good time to sell.
  • Market Activity: While sales are increasing slightly, the market remains competitive, so pricing your home correctly is crucial.

Looking Ahead

While 2024 is expected to be stable, the political landscape in 2025 could introduce volatility, especially with potential tax policy changes on the horizon.

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