Rates continue to decline on expectation of economic stabilization

This week marks the 5^th straight week for the slow, but steady decline of mortgage rates that have now reached a 9 week low. Freddimac.com is reporting as of 11/30/23 that rates have fallen to 7.22% from their record high in October at 7.79%. It is expected tomorrow that rates will be reported in the 7.1 – 7.17% range, a full half point drop since Halloween. 

This shift is a welcome one following the last 2 years of steady interest rate increases by the FOMC to tame what is has been coined “stubborn inflation”. Although inflation is still above the FOMC’s benchmark of 2% the data is showing that the market is normalizing, and the expectation of better economic months are on the horizon. The question now is what does that mean for the real estate industry and mortgage rates? 

Now that rates have declined for nearly 2 straight months there is an increased consumer confidence that has entered the market. Mortgage applications, showing appointments, and online buyer activity are all on the rise. The expectation amongst most buyers is that the market is finally recovering and within the next 10-18 months they’ll be able to refinance their 7% interest rate for a 4 – 5% rate. Whether this is expectation will be a reality is up to the FOMC and their rate decisions over the next several months.

With Christmas and New Year’s coming up in the next few weeks the market is expected to hit it’s normal December stall where very little happens in the way of financial market shift and buyer activity. But once we close out 2023, we should be ready for 2024 to take off like a rocket thanks to the pent-up demand created in the last two years. 

Countless buyers and sellers have postponed their moving plans thanks to high interest rates and a lack of inventory. Now that rates are coming down the pent-up demand from the last 2 years is ready to pop. With historically low inventory this could create a perfect storm of overbidding similar to that of the COVID years. 

We’re obviously crossing into crystal ball territory here, but the data is rolling in and it’s looking like 2024 could be a crazy year for real estate. If you’re considering buying or selling in 2024 my recommendation is to consider your options sooner than later to try and reap the benefits of a slower market before the peak buying season in the spring and summer. As always if you want to discuss the market, or how I can help you in buying or selling your home don’t hesitate to send me a message, email, call or text anytime!