WASHINGTON - Fannie Mae's Economic and Strategic Research (ESR) Group has provided a cautiously optimistic outlook for the housing market in 2024. In their latest forecast, they anticipate that the market will gradually stabilize, with several key indicators pointing towards potential improvements for both homebuyers and sellers.
According to the ESR Group, mortgage rates are expected to fall below 6%, a shift that may encourage more homeowners to refinance. The Refinance Application-Level Index suggests that refinance volumes could likely double, providing relief from the "lock-in effect" that has been restraining existing home sales. This effect has made it financially unattractive for many homeowners to sell their homes and purchase new ones due to higher prevailing mortgage rates.
The easing of mortgage rates is projected to boost the housing market, with the ESR Group forecasting an increase in existing home sales from 3.8 million units in Q4 of the previous year to approximately 4.5 million units by Q4 2024. The demand for new single-family homes is also expected to rise, although concerns about housing affordability continue to loom over the market.
Despite the positive outlook, the ESR Group warns that the risk of recession has not been entirely eliminated, given the ongoing economic uncertainties. Nonetheless, they expect modest growth in the economy, driven by improved financial conditions and an increase in real personal income, which could further support the housing market's recovery.
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