Fannie Mae’s most recent economic projections, up to March 2024, suggest that mortgage rates will remain elevated for a while longer.
Per Fannie Mae’s Economic and Strategic Research (ESR) Group, the 30-year mortgage rate is now projected to sit at 6.4% by the end of 2024–higher than the previously projected 5.9%. This will likely cause lower than hoped for home sales during 2024 as homebuyers are less likely to close in a high mortgage environment.
The state of mortgage rates goes back to the Federal Reserve’s monetary policy, currently laser-focused on fighting inflation. While the Federal Reserve is no longer raising interest rates, their cautiousness is extending to resilience about cutting them–supported by an increase in prices and, per Fannie Mae’s reporting, inflation and the job market being “hotter than expected.”
“The housing market is likely to continue to face the dual affordability constraints of high home prices and elevated interest rates in 2024,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Hotter-than-expected inflation data and strong payroll numbers are likely to apply more upward pressure to mortgage rates this year than we’d previously forecast, as markets continue to evolve their expectations of future monetary policy. Still, while we don’t expect a dramatic surge in the supply of homes for sale, we do anticipate an increase in the level of market transactions relative to 2023 — even if mortgage rates remain elevated.”
For more information, visit https://www.fanniemae.com/.
