Things to Know About the Mortgage Market in 2024
Mortgage Rates
Mortgage rates have been a hot topic, especially after the significant increases seen in the past. As of early 2024, the average rate on a 30-year mortgage stands at 6.84%. While this is a decrease from the 20-year highs seen previously, it’s still higher than the rates homeowners have enjoyed in the past decade. Experts predict that rates may continue to fluctuate, with forecasts suggesting a range between 6% and 7% for most of the year.
Home Prices and Sales
The median sale price for an existing home in the U.S. was $382,600 as of December 2023, continuing a trend of year-over-year price increases. Despite the high prices, the volume of home sales has softened, with existing-home sales declining for several months before a slight rise in November 2023, followed by another fall in December. This trend indicates that while the market is not in a crash, it remains challenging for buyers.
Inventory Levels
A significant factor affecting the housing market is the low inventory of homes for sale. This shortage has been persistent and is expected to continue into 2024, which could keep home prices high due to the imbalance between supply and demand. The lack of inventory is also contributing to the affordability challenges faced by many potential homebuyers.
Market Predictions
The National Association of Realtors predicts that median home prices will rise 1.4 percent to $395,100 in 2024, and then another 2.6 percent to $405,200 in 2025. However, the market’s direction will largely depend on whether mortgage rates continue to decrease, which could encourage more sellers to enter the market and improve inventory levels.
Buyer or Seller’s Market?
The current market conditions suggest that it’s neither a strong buyer’s nor seller’s market. While sellers benefit from high prices, buyers are facing high rates and low inventory. If rates continue to cool down, it could shift the market dynamics, potentially making it more favorable for buyers.
Refinancing Considerations
For those considering refinancing, the decision will depend on how mortgage rates move throughout the year. With rates expected to remain elevated, refinancing may only be advantageous for homeowners with significantly higher current rates or those looking to tap into their home equity.
“Home is the nicest word there is.”
– Laura Ingalls Wilder
Final Thoughts
The mortgage market in 2024 presents a mixed bag of opportunities and challenges. While rates have shown signs of stabilizing, they are still relatively high, and the inventory shortage continues to be a hurdle. Prospective homebuyers should stay informed about market trends, prepare for the possibility of continued high prices, and consider their options carefully in this dynamic environment.
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