Mortgage & Housing Update 12/16/2023

Really important news this week! The Fed kept rates on hold, but more importantly, Fed members are now expecting rate cuts of 0.5% to 1.0% next year. The markets were overjoyed, with 10-yr treasury yields moving below 4% and average 30-yr mortgage rates dropping to 6.6%. That's down almost 1.5% in just two months!

Welcome to my Mortgage & Housing Update. My name is Pauline Lee. I am seasoned real estate professional, with expertise in financing and partnered with excellent real estate agents. My goal here is to help you understand the current trends, to help you make decisions toward your real estate goals. Let’s connect to talk about your specific scenario. Find me through the links in my bio or comments. I encourage you to get pre-approved.

Inflation Ebbing

It doesn’t take an economist to see what’s going on: the rate of inflation peaked in mid-2022 and has declined steadily and significantly since then. November “headline” CPI (inflation for consumers) dropped to +3.1% year-over-year and November “headline” PPI (inflation for businesses) fell to just 0.9% year-over-year. 

The Fed’s forecasts

The Federal Reserve kept short-term interest rates steady for the 3rd-straight meeting. No surprise there. But what WAS a surprise was the Fed members’ forecasts for where they think the Federal Funds Rate will be by end of 2024. 15 out of the 19 members expect rate cuts of between 50 and 100 basis points over the course of next year.

Throughout 2023, Chairman Powell has repeatedly watered down any rate cut excitement. But there was no hawkish talk this time. Instead, he explicitly said that risks to the economy are high enough, and waiting for inflation to fall to the Fed’s 2% target would be a mistake.  So although the benchmark rate remains higher, it won’t be for longer. 

Party Time

The Fed’s pivot from “maybe more hikes” to “cuts next year” had the markets rejoiced. The Dow and S&P 500 hit record levels. The 10-yr US treasury yields dropped to 3.93%. 

Mortgage Market 30-year mortgage rates fell to the 6s! 

And average 30-year mortgage rates fell to 6.6%. That’s a decrease of nearly 150 bps in just 2 months. This will certainly boost demand.. but will it help supply? That is the big question. 

New NAR Forecasts

The National Association of Realtors’ economics team has adjusted their forecasts for 2024. Here’s what they’re looking for now:

  • Existing home sales of 4.71 million, up 13.5% year-over-year
  • Median home prices to rise 0.9% year-over-year (most cities up, some cities down)
  • 30-year mortgage rates to average 6.3% over the course of the year
  • 1.48 million housing starts in 2024, 1.04 million of which will be single-family homes

Thank you for tuning into my Mortgage & Housing Update.  My name is Pauline Lee. I am seasoned real estate professional, with expertise in financing and partnered with excellent real estate agents. My goal here is to help you understand the current trends, to help you make decisions toward your real estate goals. Let’s connect to talk about your specific scenario. Find me through the links in my bio or comments. I encourage you to get pre-approved.

Pauline Lee, Licensed MLO nmls# 674113

IND Mortgage LLC, mortgage broker licenses MA MB1785067, NH 25686-MBR, RI 20223376LB, FL MBR5005

pauline@indmortgage.com | (617) 965-1988 | www.indmortgage.com


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