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After a year full of record-high interest rates and home prices, experts say there are signs of improvement for the housing market in 2024.
In December, the average mortgage rates dropped below 7% for the first time since August and after an 8% peak in October, which pushed housing costs to the highest level since 2000.
The average rate on a 30-year fixed rate mortgage dropped to 6.95% from 7.03% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.31%. Meanwhile, the 15-year fixed rate mortgage jumped to 6.38% from 6.29%.
“The decline poses good news for buyers,” said Jessica Lautz, deputy chief and vice president of research at the National Association of Realtors.
Interest and mortgage rates will slowly decline, giving people a “little bit more room in their budgets” when it comes to mortgage payments, experts say. Additionally, inventory is growing as new listings creep back up, said Nicole Bachaud, a senior economist at housing site Zillow.
Lower interest rates should come as encouraging news for homebuilders.
“It should be easier for builders as rates go down, as they need to borrow to build,” said Lautz. Homebuyers should see a greater supply as more homes will be built, she said.
However, consumers may still feel discouraged, added Lautz, as affordability may still be a challenge.
“We’re expecting home price appreciation to stay flat for the next year nationally, so prices aren’t really going to move much from where they’re at now,” Bachaud said.
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