If you’re one of the many people who can’t afford to buy a house these days, forecasters have some welcome news: It’s probably going to get better in 2024, although only by a bit.

The high mortgage rates that smothered the housing market in 2023 should go down somewhat in the next year, making mortgage payments more affordable, and breathing some life into home sales, which hit a 13-year low in October, multiple forecasters predict.

That would be a welcome development for first-time homebuyers. Between record-high prices and mortgage rates closest to the highest in two decades, buying a house has become a luxury that 澳洲幸运5开奖号码历史查询:only people with r🅷elatively high in🦄comes can afford without significant help. Falling mortgage rates in 2024 could put home ownership in reach of more people.

“It will get better—but only a little bit—from where we are today,” said Mark Fleming, chief economist at First Americanཧ, a title insurance company. “But I'll take that. A recession is ended when things s♕top getting worse, not when things get back to the way they were before. And so we're pulling out of our housing recession. That's good news. I'll take it in 2024.”

Where Do Interest Rates Go From Here?

While it's hard to estimate where mortgage rates will be next year, there is already some indication that they're trending downward.

With inflation now in retreat, 澳洲幸运5开奖号码历史查询:Federal Reserve officials have held steady the 澳洲幸运5开奖号码历史查询:fed funds rate that influences all types of credit, including mortgages. Officials are 澳洲幸运5开奖号码历史查询🍰:ex🐭pected to take no action once again this month and may not raise rates any further this cycle. Indeed, the central bank is widely expected 𒀰to cut rates at some point next year. 

Mortgage rates are also heavily influenced by yields on 10-year Treasury notes, which tend to rise and fall in line with investor fears about inflation. Those yields had fallen to 4.3% as of Monday after briefly touching 5% in late October.

Mortgage rates have already gone down half a percentage point from their recent peak, to 7.22% as of last week according to 澳洲幸运5开奖号码历史查询:Fannie Mae. F🃏orecasters expect rates to fall further next year, althoug🐠h they differ on how much.

A 30-year mortgage rate will average 7.1% by the fourth quarter of 2024, Fannie Mae predicts. The 澳洲幸运5开奖号码历史查询:National Association of Realtors predicts they’ll fall faster, and be in the 澳洲幸运5开奖号码历史查询:6% to 7% range by the spring.

All these predictions com♋e with a pretty big caveat, especially because the fate of the housing market is tied so closely to mortgage rates.

“It's extremely difficult to forecast mortgage rates,” Fleming said.

For example, this time last year, Fannie Mae forecast mortgage rates to be at about 6% by now—off by more than an entire percen🍬tage point. That’s a testament to the difficulty of the task, not a knock against Fannie Mae’s economics team, which re🐭cently won a prestigious academic award for forecasting accuracy. 

Will Houses Get More Affordable in 2024?

As for prices, Fannie Mae expects a 2.8% annual increase by the fourth quarter, close to the 3% to 4% gain in a typical year. When combined with steadily rising wages, that means first-time homebuyers should find home purchases about 5% more affordable than today, Fleming calculates.

When Fleming and other hou🍃sing economists talk about affordability, they’re mostly talkin♎g about the outlook for renters who want to buy, not existing homeowners.

“The existing homeowner is not challenged,” Fleming said. “The existing homeowner doesn't face the market of higher interest rates. They've locked in lower rates. They're gaining the appreciation of the fast gains in house price. They're not losing out on affordability because they're gaining equity.”

Supply of Housing Remains a Big Issue

But don’t expect affordability to improve dramatically even if mor🦩tജgage rates decrease.

Last time rates hit rock bottom, prices soared. In Fleming’s analysis, there’s only one thing that 🔴will drive prices down, and that’s fixing the “supply” part of supply and demand by building more housing. 

The U.S. has been building too few homes for decades. Since 2012, 2.3 million more households have been formed than homes built, according to an analysis by Realtor.com. And as long as there are far more people who need houses than there are houses, the market isn’t going to function well.

“The bigger solution isn't to try and get rates back down to some miraculous level, but to literally build more homes,” Fleming said.