2023 was a demoralizing year for many aspiring home buyers.
Mortgage rates surged—hitting a high of 7.79% in October—and median Real Estate home prices in the third quarter were north of $400,000. Moreover, in July, Real Estate average monthly payments hit their highest level ever at $2,306, according to Intercontinental Exchange, a financial technology and data services provider. However, 2024 may be a better year to purchase a home—at least for some. While home prices will likely remain elevated—and even increase in some markets—industry experts expect prices in certain areas of the country to soften. The federal funds rate is the benchmark interest rate financial institutions charge each other for overnight loans; it tends to indirectly influence mortgage rates.
Real Estate Economists are also optimistic that the Federal Reserve is done with its rate-hiking campaign to lower inflation after policymakers kept the federal funds rate unchanged for a third straight meeting on December 13.
The federal funds rate is the benchmark interest rate financial institutions charge each other for overnight loans; it tends to indirectly influence mortgage rates.
Even so, affordability challenges will continue in 2024. Pent-up demand and low inventory will generally bolster prices, and elevated mortgage rates will remain until the Fed implements cuts to the federal funds rate.
Real Estate Mark Fleming, chief economist at First American Financial Corporation, predicts a “flat stretch” ahead for the housing market. “If the 2020-2021 housing market was too hot, then the 2023 market was probably too cold, but 2024 won’t yet be just right,” Fleming said in his 2024 forecast.