Timing Home Purchase: Insights from Housing Market Economists

The housing market is showing signs of relief, with declining mortgage rates and softening prices, offering hope for eager homebuyers who’ve been on standby. Despite this positive shift, there’s a risk associated with waiting for further improvements, as dropping rates might attract more buyers, potentially driving home prices up, as cautioned by real estate expert Barbara Corcoran.

Reflecting on the past, Lawrence Yun from the National Association of Realtors distinguishes the current scenario from 2020’s drastic rate drops. He anticipates a steadier mortgage rate around 6% next year, coupled with a predicted increase in housing inventory, which could prevent a sudden surge in demand driving prices higher.

While signs of increased housing supply emerge, such as November’s housing starts data, experts anticipate a gradual return of buyers due to the temporary decline in mortgage rates. Hannah Jones from Realtor.com suggests that this might reduce immediate competition among buyers re-entering the market.

However, predicting mortgage rates and home prices remains uncertain. Redfin’s chief economist, Chen Zhao, highlights the challenge in forecasting without the context of a recessionary rate cut by the Fed, a factor not expected in 2024.