NAR expects mortgage rates to fall to 6.4% by year-end, declining further to 6% in 2024, the trade association predicts in a housing market outlook published July 27.
“With consumer price inflation calming close to the Federal Reserve’s desired conditions, mortgage rates look to have topped out,” says NAR chief economist Lawrence Yun in the report. “Given the ongoing job additions, any meaningful decline in mortgage rates could lead to a rush of buyers later in the year and into the next.”
From the Mortgage Bankers Association:
MBA’s July Mortgage Finance Forecast has a more optimistic outlook, with the 30-year mortgage rate falling to 5.9% by the end of 2023. Conditions improve in 2024, with the industry group projecting rates to fall below 5% in the fourth quarter.
“Our baseline economic forecast anticipates that interest rates will moderate over the next year and half, helping to break the current logjam in transaction activity and bringing relief to financing costs and property valuations,” said Jamie Woodwell, head of commercial real estate research at MBA, in an Aug. 3 statement. …
Advice for Buying or Selling
a Home in 2023 and Beyond
The bottom line is that mortgage rates are expected to stay elevated for at least the next couple of months, which has implications for prospective homebuyers and sellers. But regardless of current mortgage rate trends, Americans will always have a need to move. New job, new baby, empty nester, retirement, caregiving, marriage, divorce etc…
Here’s what you should consider if you’re planning on buying or selling a home in the near future.
What Buyers Should Know: Patience Doesn’t Always Pay Off
With stubbornly high home prices and 7% mortgage rates, many homebuyers understandably feel priced out of the current market. Two-thirds of prospective homebuyers are waiting for rates to fall before buying a home, according to a spring 2023 U.S. News survey.
At the time the survey was conducted in March, the Freddie Mac 30-year fixed mortgage rate was around 6.5%; but it’s been four months since then, and rates have actually risen to nearly 7%. To make matters worse, the median existing-home sales price rose from $375,400 in March to $410,200 in June, according to NAR. Suffice it to say, homebuying conditions did not improve for those who chose to wait.
Even if mortgage rates do fall, every slight drop brings with it a rise in homebuyer demand. That’s evidenced by MBA’s Weekly Applications Survey, which finds a meaningful uptick in mortgage purchase applications during weeks when rates are lower.
“Buyers who are waiting for lower rates will likely have some company. And if they're OK with competitive market conditions, that can be a fine approach,” says Hale. “If you think you're going to get a lower rate and still get the same market conditions that buyers have now, I think that's a misconception." … Mortgage rates are still likely to pull back somewhat by the end of the year, and home sales prices tend to be lower during the off-season.
“For buyers who are not in a hurry, the fall and winter months could bring better values and a less competitive environment to find the right home” Ratiu says.
