With the Federal Reserve possibly easing monetary policy, the 30-year fixed mortgage rates in 2024 are expected to average around 6.6% to 6.8%. This change may alter the perspective of potential homebuyers, reducing the burden of home purchases and stimulating increased demand.
Additionally, with the decline in mortgage rates, the cost of home mortgages will also decrease, allowing many families to afford higher home prices and mortgages.
Forecasts for housing prices in 2024 vary among major institutions. Realtor.com predicts a 1.7% decrease, while Redfin expects a 1% decrease. However, Zillow predicts a 2.4% increase. This suggests that while the rate of price increase may slow down, the overall trend is still upward. The rise in prices is primarily due to a shortage of housing supply and an increased demand from buyers.
The expected inventory of existing homes for sale in 2024 is predicted to decrease. Realtor.com forecasts a 14% decrease, while Redfin expects home sales to increase by 5%. This may indicate that the shortage of supply will persist, further driving up housing prices. Additionally, the impact on local housing markets is inevitable as residents in some areas start moving to more attractive cities.
With falling interest rates and improved demand, builders will increase new home construction. Goldman Sachs predicts a slight increase in housing starts to 1.335 million units in 2024, further alleviating supply pressures. At the same time, builders will undertake more housing projects to meet the growing demand.
High costs may drive up demand for rentals, and some Americans may choose to move in with their parents. This could have an impact on the rental market. However, this phenomenon may be mitigated as builders plan to increase more rental housing projects.
It is important to note that these predictions are based on current economic and market conditions and may change due to various factors. The real estate market is highly volatile, and investors and buyers should consider their specific situations and risk tolerance when making decisions. Additionally, regional differences may lead to different market performances.
