2023 Housing Market in Review: Looking Back on a Rough Year for Buyers
Kevin Brierton – 1.5.2024
Things are finally turning around for the better as far as housing is concerned – and it looks like they might actually stay that way this time!
Mortgage rates have continued to drop over the last couple of weeks, and we are now in the ninth consecutive week of improvement. The average 30-year fixed mortgage rate is now back to where it was in late June!
Existing home sales also increased month-over-month in November, which is great news after five consecutive months of declines. This shows that buyers are becoming more confident in the market and ready to take advantage of improving affordability conditions.
We’re also getting more home supply! Housing starts hit an 18-month high in November and will probably gain even more momentum as we move into 2024, with declining mortgage rates and incentives from builders likely to draw even more potential buyers back into the housing market.
Why Have Rates Fallen So Much?
The decline in mortgage rates happened after continued news of easing inflation and as the Federal Reserve decided to keep the Fed Funds rate unchanged while hinting at possible rate cuts in 2024.
With the inflation rate hitting the 2% target and unemployment still relatively low, the Fed voted unanimously during their December 13th meeting to keep the Fed Funds rate steady between 5.25%-5.5%. They also mentioned they expect at least three rate cuts in 2024 if things continue to improve.
Mortgage rates don’t exactly follow the Fed Funds rate, but instead track the yield on the 10-year U.S. Treasury. The yield has been falling since mid-October and saw a big drop immediately following the Fed’s comments.