“If you found yourself priced out of the housing market in 2023, there’s a potential silver lining in 2024.
“Mortgage rates are anticipated to decrease by nearly 1% by the end of the year, dropping from 6.6% to as low as 5.75%, according to recent housing forecasts. This reduction could mean a monthly savings of around $200 for buyers of a median-priced home.
“On Thursday, 30-year fixed mortgage rates reached 6.6%, a significant drop from their peak at 7.79% in October 2023, according to Freddie Mac data — the lowest since May 2023.
“Forecasts for 2024 suggest a ‘moderation toward a more normal level’ in rates, with 30-year fixed averages expected to fall below 6% by the year-end, according to a revised outlook by Fannie Mae’s Economic & Strategic Research group.
“This aligns with other predictions:
– National Association of Realtors chief economist Lawrence Yun expects 30-year fixed rates to ‘hold steady’ at 6% in the upcoming months.
– The Mortgage Bankers Association projects 30-year rates of 6.1% by the end of 2024.
– Bankrate, more optimistically, predicts average 30-year rates of 5.75% by the end of 2024.
“Considering a 20% down payment on a median-priced home valued at $431,000, CNBC Make It’s mortgage calculator estimates a potential monthly mortgage cost reduction of up to $190 in 2024. The projected 30-year fixed interest rates are as follows:
– 6.6% (current rate): $2,202
– 6.1%: $2,089
– 5.75%: $2,012
Over the entire mortgage duration, this could mean saving around $68,000 on interest.
“Note that these totals only account for the mortgage amount and exclude additional expenses like private mortgage insurance, home insurance, and property taxes.
“While a lower mortgage rate could provide some relief, it’s essential to consider that home prices are expected to rise in 2024. The National Association of Realtors projects a modest home price increase of 0.9%, Fannie Mae anticipates 2.4%, and CoreLogic forecasts a year-over-year gain of 2.5% as of November 2024. However, regional variations can significantly impact home price growth.
“Deciding whether it’s a good time to buy a home depends on your personal finances and preferred location. While a 1% drop in mortgage rates may not be sufficient relief on its own, declining home prices in certain regions, particularly Florida, could make a significant difference.”
