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The economic environment has changed over the last few months amid the elections, Federal Reserve rate cuts and stronger than expected job growth. However, the housing market remains in a bit of a deadlock.
Buying a home can be challenging right now housing prices high, existing homes scarcity, i interest rate still relatively high. according to Harvard Universitythe US home price index is 47% higher than in 2020, and existing housing inventory is down 34% from 2019.
Lawrence Yun, Chief Economist of the National Association of Real Estate Agentsnotes that 2023 and 2024 were tough years for home sales, but the worst might be over.
One of the key changes that many potential buyers are waiting for is lower mortgage rates — that we’ve seen some signs of recently. Next, we’ll look at mortgage rate trends over the past year and what experts predict will happen this December.
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Mortgage rate trends in 2024
The 30-year fixed mortgage rate fluctuated between 6.5% and 7.5% during the first half of 2024. July then marked the beginning of a downward trend that reached its peak lowest, 6.08% in September, coinciding with the Fed’s first rate cut of 0.50%. Since then, rates have risen again and stabilized in the high 6% range, despite another 0.25% rate cut in November.
“Last month, the jobs report came back better than expected. Unfortunately, to ease mortgage rates, unemployment still needs to rise and new jobs have been added to reduce,” he says Jeremy Schachter, Arizona Branch Manager of Fairway Independent Mortgage Corporation.
The 10-year treasury rate followed by similar trend to the average mortgage rate, falling to 3.63% in September before rising to 4.44% in November.
“Mortgage rates and 10-year Treasuries are not the same thing. But for the most part, mortgage rates follow the movement of 10-year Treasuries,” says Kevin Leibowitz, founder of Grayton Mortgage in New York.
Leibowitz explains that September’s low of 3.63% was ahead of the Fed’s first rate cut of this cycle. “After the election, rates got worse — the market felt that some of the potential policies that the Trump administration would come up with would be inflationary,” he says.
However, Leibowitz believes the post-election rate jump was a bit overblown and we’re now settling into a wait-and-see environment. “We’re not seeing wild swings up and down. That lack of volatility, along with lower absolute rates, is helping provide a downward trend in mortgage rates,” says Leibowitz.
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Mortgage rate outlook: What experts predict for December 2024
If you’re thinking of buying a home soon, every tenth of a point counts. Here’s where some experts predict rates will hit in December:
- 6 middle and lower: “I see 30-year fixed rates in the mid to low 6% range at the end of the month, barring any unusual financial or political news,” says Leibowitz.
- Middle and higher 6: “I expect rates to be in the mid to upper 6s through the end of 2024,” says Schachter.
- 6 superiors: “We could see rates close out 2024 below 7%, but I wouldn’t expect us to break out of the 6% range until potentially the first quarter of 2025,” says Joe Muck, a realtor with J Muck Realty in Michigan.
- top 6: Realtor.com foresees a mortgage rate of 6.7% at the end of the year.
December will bring another Federal Open Market Committee meeting and potentially another Fed rate cut, but Lebowitz says that has already been accounted for. “The Fed is scheduled to meet on December 17-18, and the anticipated 0.25% cut that the market expects to be announced is already reflected in the 10-year Treasury rate,” he says.
Although mortgage rates don’t look like they will autumn for much of December, declines are more likely in the coming years. Yun predicts six to eight more Fed rate cuts this cycle and thinks mortgage rates will rebound to between 5.5% and 6.5% over the next four years.