U.S. Home Prices Defy Gravity Amid High Mortgage Rates
Despite high mortgage rates, home prices rose in more than 90% of U.S. metropolitan areas in the first quarter of 2024. According to the National Association of Realtors (NAR), 205 out of 221 metro areas saw price gains, with some experiencing double-digit increases. This trend is driven by a critical lack of housing supply unable to meet the strong buyer demand. The median existing single-family home price climbed 5% year-over-year to $389,400. The South saw the largest share of sales at 46%, while the Northeast experienced an 11% price growth. High mortgage rates, which ranged from 6.6% to 6.94% for a 30-year fixed loan during Q1, did little to deter price growth due to the severe supply shortages
(MPA Magazine)
(S&P Global).
U.S. Residential Mortgage and Housing Outlook
The U.S. housing market, though subdued in recent years, is expected to see an increase in mortgage origination and securitization activities in 2024. The average 30-year fixed-rate mortgage (FRM) is projected to be around 6.8% for the year, marking the highest annual rate in over 20 years. This high rate impacts affordability, but the market is resilient due to strong population growth and persistent demand. Single-family housing starts are expected to remain robust, with total starts (including multifamily) slightly above 1.3 million units for the year
(S&P Global)
(Fannie Mae).
Fannie Mae Forecasts Mortgage Rate Decline
Fannie Mae’s Economic and Strategic Research (ESR) Group predicts that mortgage rates will dip below 6% by the end of 2024. This decrease is expected to boost refinance volumes and existing home sales, which are forecasted to reach an annualized pace of 4.5 million units by Q4 2024. The lower rates should alleviate some of the affordability pressures, though a full recovery to pre-pandemic sales rates will take time. New single-family home constructions are anticipated to increase, helping to balance the market and moderate home price growth
(Fannie Mae).
These developments indicate a dynamic and evolving mortgage market in the U.S., with significant implications for buyers, sellers, and investors alike. Stay informed to navigate these changes effectively.
