What's expected in rates and pricing for 2024 (though maybe NOT for new builds)....

 

Mortgage Rates Expected to Dip Below 6 Percent in 2024, Boosting Home Sales

ESR Group’s 2024 Theme: “Housing Seeks Balance Amid Economic Uncertainty”

WASHINGTON, DC – January 18, 2024 – The housing market is expected to begin a gradual return to a more normal balance in 2024, following years of significant oscillations in mortgage rates and divergences of key housing market measures from their historical, pre-pandemic relationships, according to the January 2024 commentary from the Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group. The ESR Group expects mortgage rates to decline in 2024, ending the year below 6 percent. The lower rate environment is expected to boost refinance volumes, which are already on the upswing, as evidenced by the recent uptick in Fannie Mae’s Refinance Application-Level Index , to nearly double their 2023 levels in 2024. Lower rates are also likely to help “thaw” the existing home sales market currently affected by the so-called “lock-in effect.” In fact, the ESR Group expects the annualized pace of existing home sales to move up to 4.5 million units by the fourth quarter of 2024, compared to 3.8 million in Q4 2023. However, a full recovery to the pre-pandemic sales rate is expected to take years, as housing affordability remains stretched extremely thin by historical standards relative to household incomes. The ongoing lack of supply and affordability constraints in the existing homes market are expected to continue to bolster the market for new single-family homes, with 2024 starts and new home sales forecast to top 2023 levels. Overall, though, the ESR Group expects that the slowly normalizing existing homes market, as well as additional housing supply from the construction of new homes, will help keep further home price growth in check in 2024: Home prices are now expected to rise 3.2 percent over the year, compared to 7.1 percent in 2023.