As 2024 kicks off, positive signs for the housing market are appearing in the sector which could bode well for the upcoming spring buying season. Supplies look greener while borrowing costs are on the decline.
A recent report from Redfin said, “2024 is shaping up to be more active than 2023 for homebuyers and sellers, with mortgage applications and new listings rising.” Borrowing costs have fallen from nearly 8% for the 30-year fixed in mid-fall 2023 to the current mid-6% range. For the typical U.S. homebuyer, monthly payments have fallen to $2,456 recently down from October’s record high of over $2,700. Also, new listings are up 8% year-over-year for the week ended January 14th.
More positive news is coming from Fannie Mae with its latest headline reading, “Mortgage Rates Expected to Dip Below 6% in 2024, Boosting Home Sales.” Fannie is expecting the housing market to begin a gradual return to a more normal balance in 2024. Home prices are also expected to increase by 3.2% over the year, compared to frothy 7.1% in 2023. New home sales are expected to increase along with existing home sales – moving up to 4.5 million units by Q4 2024, compared to 3.8 million in Q4 2023.
Fannie Mae is forecasting that the 30-year fixed rate mortgage will fall below 6% by the end of 2024. And that homebuilders will continue to add new supply – both of which should aid affordability.
If borrowing costs follow the path below 6%, sellers may jump into new purchases, creating activity as 2024 unfolds. In addition, lower borrowing costs might incentivize home builders to increase construction, adding to the overall housing supply.
Bottom line: Jobs buy homes and with a still tight labor market in the U.S., having a stable job and income is a crucial factor in one’s ability to qualify for a mortgage and afford homeownership.
Source: Mortgage Market Guide
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