Mortgage rates could fall below 6% and see less volatility in the year ahead, according to Nadia Evangelou, senior economist and director of forecasting at the National Association of Realtors (NAR). As inflation slows in the coming months, mortgage rates are expected to pull back from a peak 7% high, but remain double what they were a year ago, averaging 6.48% this week, NAR reports.
Though rates could drop steadily throughout 2023, prospective buyers are still holding off on home purchases and waiting for home prices to fall in tandem with interest rates, but the Fed’s inflation control methods may not have a substantial impact on housing costs for another year, experts say.
Affordability has been hammered by higher rates in recent months. Evangelou says the qualifying income for homeownership is now near the $100,000 threshold, which means only 32% of all households and 15% of all renters can afford to buy a median-priced home. The majority of these households are Gen Xers, whose median age is 51, she adds.
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