Skylar Olsen, chief economist at Zillow stated that rates in the 3% range seen in 2020 and 2021 will not return. Lawrence Yun, chief economist at NAR, said he expects the 30-year fixed mortgage rate to average lower at 6.3% in 2024, and Realtor.com forecasts mortgage rates to average around 6.3%. 8% during 2024 and will end the year closer to 6.5%.

What does this mean?

It means that housing affordability can improve.

As mortgage rates drop slightly in the new year and more homeowners who have held on to their ultra-low mortgage rates see the gap between their current rate and the current mortgage rate narrow, more homeowners will put their homes on the market. This will bring more inventory to the market, allowing prices to drop slightly in some markets and stop rising in others. With mortgage rates averaging 6.6%, the American family can afford to buy a mid-priced home without spending more than 30% of their income, a standard affordability threshold, according to NAR.

At 6.6%, it is estimated that 4.5 million households will once again be able to afford a medium-priced home. 4.71 million existing homes are forecast to be sold, an increase of about 13.5% from this year, which is projected to end with 4.1 million units sold. Likewise, a continued increase in new home construction is forecast to continue to boost inventory. It predicts there will be 1.48 million housing starts in 2024, including 1.04 million single-family and 440,000 multi-family.

Based on pent-up demand, Yun said, Austin, Texas, will be the top real estate market to watch.

Based on pent-up demand, Austin, Texas, will be the top real estate market to watch, he said. “Metropolitan markets in southern states will likely outperform others due to faster employment gains, while markets in the Midwest will see gains from being in the most affordable region,” Yun said in a statement. Other areas where the NAR predicts markets will outperform the national average include the following cities: Dallas and Fort Worth, Texas; Dayton, Ohio; Durham and Chapel Hill, North Carolina; Harrisburg, Pennsylvania; Houston; Nashville, Tennessee; Philadelphia; Portland, Maine; and Washington.

Source: cnnespanol.