Here's a summary of what's been rotten in the state of housing: Home prices skyrocketed from the middle of 2020 to mid-2022. Then, mortgage rates took off, and the 30-year fixed-rate home loan crested at almost 8% in October 2023. Home buyers struggled with affordability as high interest rates eroded their borrowing power. They had few homes to choose from, anyway.
Mortgage rates should keep falling The most important development involves mortgage rates. They have improved since autumn. In January, the average rate on the 30-year fixed-rate mortgage was 6.64% in Freddie Mac's weekly survey. That was down from October's average of 7.62%. That drop of nearly one percentage point makes a big difference in affordability: It would cut $198 off the monthly payment on a $300,000 loan. If inflation finally cools off, as it's expected to, forecasters believe mortgage rates will fall further. Fannie Mae and the Mortgage Bankers Association predict the 30-year mortgage will average somewhere around 6% in the fourth quarter of 2024, down from 7.3% at the end of 2023.
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