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Mortgage Rates Expected to Decline by Mid-2024

In a significant shift for the U.S. housing market, predicts a decline in 30-year mortgage rates below 7 percent by April 2024, as outlined in their latest housing forecast. This anticipated drop reflects a broader trend of economic cooling, with the average mortgage rate expected to hover around 6.8 percent throughout 2024 and potentially dip as low as 6.5 percent by year-end.

A Change in the Housing Market

Danielle Hale, chief economist at, expressed optimism for prospective buyers, stating that housing is beginning to become less expensive. “We’re gonna start to see some relief for buyers who have been priced out,” she said in a MarketWatch report. This change marks a significant departure from the steep price increases of recent years.

Factors Contributing to the Trend

The catalyst for this downward trend in mortgage rates lies in the weakening U.S. economy. A gradual rise in unemployment and a softening labor market are among the factors contributing to this shift. More critically, improvements in inflation are expected, signaling a break from the high levels witnessed in the past few years.

Recent economic data has shown signs of this cooling. October saw a flattening in inflation rates, aided by lower gasoline prices. Concurrently, there was a slight increase in the unemployment rate to 3.9 percent, a 21-month high. These factors have already begun influencing mortgage rates, which have receded from the 8 percent range.

Historically Low Rates Unlikely

However, cautions against expectations for a return to the historically low rates of 4 percent seen between 2013 and 2019. Hale points out that the earlier period, characterized by inflation consistently below 2.5 percent, was an anomaly. “It seems unlikely that we’ll see mortgage rates get back to that range in the foreseeable future,” she noted in the report.

Home Prices and Market Dynamics

Alongside mortgage rate predictions, forecasts a 1.7 percent decrease in home prices over 2024. The real estate market may see varied dynamics, with potential price cuts by sellers and reduced listings leading to a significant drop in existing home inventory.

Regional Differences in Home Prices

The report highlights stark regional differences, with strong home price growth anticipated in the Midwest and Northeast, particularly in areas like Detroit, Rochester, and Des Moines. Conversely, regions like Austin, St. Louis, and Spokane are expected to see notable declines in home prices.

Impact on Buyer Activity and Inventory

While lower mortgage rates could stimulate demand, they are expected to remain relatively high, impacting buyer activity. Additionally, the potential for increased inventory, as homeowners with lower rates consider selling, could alleviate the current market tightness.

Orginal article: Link To Article – provided by Kansas City Realtors