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Mortgage Rates Drop Below 6.7%—What’s Next for Buyers?

Mortgage Rates Drop Below 6.7%—What’s Next for Buyers?

Since peaking at 7.13% on November 6, 30-year mortgage rates have been trending lower, briefly dipping below 6.7% by December 6. Mortgage Rates Move Lower—A Positive Sign for Buyers Despite economic data that wasn’t exactly bond-market friendly—like 227,000 new jobs added in November (BLS) and a slight uptick in inflation to 2.7% YoY (CPI)—mortgage rates have fallen. For context, rates hit a near-term high of 7.13% on November 6, just after the U.S. Presidential Election. The recent dip below 6.7% provides a welcome reprieve for buyers who’ve been squeezed by affordability concerns. The Fed and Future Rate Cuts: What to Expect The Federal Reserve’s actions will play a critical role in determining where mortgage rates go from here. Here’s where the Fed Funds futures market currently stands: December 18 FOMC Meeting: 98% probability of a 25 bps rate cut (from 4.50–4.75% to 4.25–4.50%). Only a 2% probability the Fed will hold steady. January 29 FOMC Meeting: 75% probability the Fed will hold steady. 20% probability of an additional 25 bps cut (which would drop the range to 4.00–4.25%). What This Means for Buyers and Sellers Lower mortgage rates could bring more buyers back into the market. Affordability improves as rates decline, helping buyers stretch their budgets and potentially increasing competition for homes. For sellers, falling rates may unlock demand from buyers who’ve been waiting on the sidelines. Key Takeaways: Mortgage rates have dipped below 6.7%, down from 7.13% in early November. The Fed is widely expected to cut rates further on December 18, with additional cuts possible in early 2024. Lower rates could lead to increased market activity as buyers regain purchasing power. What’s Next?If you’re considering buying or selling, now is the time to watch rates closely. A shift downward could create more favorable conditions in early 2024, making this a window of opportunity to act before competition heats up.
Where Are Home Prices Headed? Experts Predict Growth Through 2029

Where Are Home Prices Headed? Experts Predict Growth Through 2029

Fannie Mae’s year-end survey of 100+ housing experts predicts steady home price growth, with cumulative gains ranging from 14% to 40% between 2025 and 2029. What does that mean for homeowners and buyers? Expert Forecasts: A Look at the Numbers According to Fannie Mae’s housing forecasts, price growth is expected to average around 4% annually in 2024 and 2025. When we look further out, cumulative growth projections for the next five years (2025–2029) vary widely: 14% cumulative price growth (low end) = ~2.7% annual growth 40% cumulative price growth (high end) = ~7% annual growth 22% cumulative price growth = steady 4% annual growth over 5 years (compounding included) Key Insight: Forecasting beyond a few years is always challenging, but the overall consensus points to continued appreciation—good news for homeowners and buyers looking to build equity. What This Means for Homeowners Let’s break this down with real numbers: 4% annual price growth over the next two years means a $400,000 home could gain roughly $33,000 in appreciation. 27% cumulative price growth (the average of the forecast range) over the next 5 years would result in $108,000 in appreciation gains on a $400,000 home. If the high end of the range materializes, 40% cumulative price growth could add a substantial $160,000 in equity gains on the same $400,000 home. Why This Matters While predicting home prices five years out is never an exact science, these forecasts reinforce a critical point: Real estate remains one of the most reliable ways to build long-term wealth. Even modest appreciation over the next few years could deliver significant equity gains for homeowners, while buyers entering the market now could benefit from those same price increases. Takeaway for Buyers and Sellers:If you’re on the fence about buying, waiting could cost you. Steady price growth—even at the lower end of the forecast—could mean higher costs down the road. For homeowners considering selling, rising equity may offer an opportunity to upgrade, downsize, or cash in on your home’s appreciation gains.
Will Lower Mortgage Rates Unlock the Housing Market in 2025?

Will Lower Mortgage Rates Unlock the Housing Market in 2025?

After two sluggish years of stagnant home sales, the big questions for 2025 are: Will mortgage rates finally follow the Fed’s cuts? And will they drop enough to revive demand and supply? Jobs Growth Rebounds, But Unemployment Ticks Higher The U.S. economy added 227,000 jobs in November, a strong rebound after October’s storm- and strike-driven slowdown. However, unemployment inched up from 4.1% to 4.2% [BLS]. Key Takeaway: October’s weak report (just 12,000 jobs) made a bounceback expected, but rising unemployment could signal economic cooling—a factor the bond market welcomed. If this trend continues, mortgage rates could soften as economic data aligns with the Federal Reserve’s goals. Inflation Stays Stubborn, Impacting Mortgage Rate Outlook The November Consumer Price Index (CPI) report showed inflation remains sticky. Both “headline” and “core” CPI rose 0.3% month-over-month, pushing annual headline inflation to 2.7% YoY and keeping core inflation steady at 3.3% YoY [BEA]. Looking Ahead: We’ll see the November PCE report (the Fed’s preferred inflation measure) on December 20. October’s data already showed inflation creeping up—headline PCE rose to 2.3% YoY, and core PCE climbed to 2.8% YoY. If inflation remains elevated, it may delay significant mortgage rate relief in early 2025. Rising Costs: Food Inflation Hits Consumers Hard The latest Producer Price Index (PPI) showed prices rising 0.4% MoM in November, double the increase seen in October. Rising food costs, particularly chicken eggs, coffee, bacon, and orange juice, are putting additional strain on household budgets [BLS]. Home Purchase Sentiment Continues to Improve Fannie Mae’s Home Purchase Sentiment Index rose for the fourth straight month, reaching 75.0 in November—the highest level since February 2022. This optimism is driven largely by consumer expectations that mortgage rates will decline [FNMA]. What This Means for Home Buyers: If rates do begin to ease, pent-up demand among buyers who’ve been sitting on the sidelines could re-enter the market. Homeowner Equity at Record Levels In Q3 2024, homeowner equity reached $17.5 trillion nationally, up 2.5% YoY, averaging about $300,000 per homeowner with a mortgage [CoreLogic]. The Wealth Effect: This increase gives homeowners significant equity to leverage for upgrades, moves, or tapping into their wealth for other investments. For sellers, this equity growth could encourage listings as confidence returns to the housing market. Another Rate Cut Likely on December 18 The Fed Funds futures market is pricing in a 98% probability of a 25 basis point cut (0.25%) on December 18. If this happens, it will bring the total cuts during this cycle to 100 basis points (1.0%)—a positive sign for future mortgage rate relief. 2025 Outlook: Will Lower Mortgage Rates Finally Unblock the Market? If inflation begins to cool and the Fed continues cutting rates, mortgage rates could trend downward in 2025. This shift would be a game-changer for buyers waiting for affordability to improve and for sellers hesitant to list due to higher borrowing costs. The past two years of stagnant sales may give way to a much-needed boost in demand and inventory, especially as pent-up buyers and sellers re-enter the market.