Mortgage Rates Could Drop to 5.4% in 2023
High mortgage rates and recession fears are pushing would-be buyers out of the for-sale market, and that waning demand could cause home price growth to moderate throughout the rest of the year, MarketWatch reports. According to Case-Shiller, home prices fell month-over-month from June to July for the first time in 20 years, and a more budget-conscious buyer pool could see housing costs fall even further as stalled house hunters wait patiently on the sidelines.
The 30-year fixed rate averaged 6.94% last week compared with 3.85% one year ago, and the MBA is expecting rates to fall to 5.4% by the end of next year, leading to a steady flattening of home price growth rather than a sharp dropoff.
“Our forecast is for home-price growth moderation to continue,” Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association, said Sunday during the organization’s annual conference in Nashville, Tenn.
But he also warned that some markets may actually see home prices drop. We’re already seeing home values fall in some markets, from pandemic boomtowns like Austin and Phoenix to well-known expensive ones in the San Francisco Bay Area.
Still, even with price drops, don’t expect a surge of inventory as people sit on their ultra-low mortgage rates that they will likely not enjoy again in the near future.