Lower mortgage rates next year unlikely to entice 'rate-locked' homeowners to sell
Even if mortgage rates ease moderately next year, as some forecasters predict, the average rate on a 30-year home loan could remain above 6%
LOS ANGELES — Several housing economists are projecting that mortgage rates will ease moderately next year, though the forecasts call for the average rate on a 30-year home loan to remain above 6%.
While lower rates could help bring more buyers off the sidelines, the projected declines are unlikely to encourage homeowners who locked in rock-bottom rates two years ago to sell. That sets the stage for the housing market to remain constrained by a low supply of homes on the market, even if rates decline, economists say.
“The costs are going to remain high and we’re going to see a lot of people just choose to sit out,” said Danielle Hale, chief economist at Realtor.com.
Hale's forecast calls for the rate on a 30-year mortgage to average 6.8% in 2024, then slip down to 6.5% by the end of the year. At First American Financial, chief economist Mark Fleming predicts the average rate will range between 6.5% and 7.5%.
The National Association of Realtors’ latest forecast calls for the rate on a 30-year home loan to average between 6% and 7% by the start of next year’s spring homebuying season.
Forecasts from other housing economists also put the average rate somewhere in the 6% range in 2024. That’s still about double what the average rate was just two years ago.
Any decline in home loan borrowing costs would be welcomed by homebuyers that just five weeks ago were facing an average rate of 7.79%, the highest in over 20 years. The average rate fell to 7.22% this week, the lowest in 10 weeks, mortgage buyer Freddie Mac said Thursday.
As mortgage rates climb they can add hundreds of dollars a
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