Mortgage rates to drop to 5.5% in 2024: Bloomberg:
Pending Home Sales Up whopping 8.3% in December and 5 more Real Estate Insights
Economists predict a decline in mortgage rates to 5.5% by the end of 2024, sparking renewed optimism in the housing market. The forecast suggests a shift from the 6% to 7% range expected earlier, marking a significant change after three years of increasing rates..
The high mortgage rates of 2023 led to a dramatic drop in existing home sales, reaching their lowest since 1995 with only 4.09 million homes sold. This situation was exacerbated by high borrowing costs, which sidelined potential buyers and locked current homeowners into their low rates, contributing to a national inventory shortage and a surge in home prices..
Federal Reserve officials anticipate at least three rate cuts in 2024, offering a brighter outlook for the housing market. The U.S. economy's improvement in 2024 makes real estate a more attractive investment, with 57% of Bloomberg survey respondents viewing it more favorably than last year.
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December 2023 saw a significant 8.3% rise in pending home sales, as reported by the National Association of Realtors (NAR). The NAR's Pending Home Sales Index, a forward-looking indicator based on contract signings, reached 77.3.
The NAR forecasts a 13% increase in existing-home sales for 2024, indicating a positive trend in the housing market. This optimism is fueled by falling mortgage rates, stable home prices, job additions, and income growth.
Lawrence Yun, NAR's chief economist, emphasizes the need for increased supply to meet the potential demand. He notes that while the market benefits from favorable economic conditions, satisfying all potential demand requires a boost in housing supply.
In 2023, smaller apartment markets outperformed larger ones in rent growth. While the largest 50 markets saw a 0.1% decrease in effective asking rents, the next 100 markets experienced a 1.6% increase.
This trend reflects the resilience of smaller markets during economic downturns. They don't experience as significant gains as larger markets in prosperous times, but they also suffer less during challenging periods.
The performance of these smaller markets varies more than in larger ones due to their diverse sizes. Despite this variability, overall, they show less volatility compared to major markets.
READ MORE: https://www.zeroflux.io/p/mortgage-rates-poised-drop-55-2024-bloomberg
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REFERENCES : Zero Flux News Letters, January 29, 2024 -
Disclaimer: The article content above is derived from Zero Flux JAN 29, 2024 newsletter and is used here for informational purposes. [DSPrecapital.com] is an independent entity and not officially affiliated with Zeroflux.