Housing prices are often affected by housing inventory. When more homes are on the market than buyers, prices may come down. However, in an environment with more house hunters than homes for sale, prices may trend higher due to demand.

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Mortgage Rate Trends for Summer 2024

June 28, 2024

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When Yahoo! Finance published its mortgage rates outlook article for the week of June 22, 2024, it noted that home loan interest rates could, according to the Fannie Mae June housing forecast, stay within the 6% range for the remainder of the year.

That affects conventional mortgages, FHA loans, and even need-based mortgages like those offered by the USDA. According to the article:

“(T)he government-sponsored enterprise now predicts 30-year fixed rates will be 6.7% at the end of 2024. This is an improvement over its May forecast, which anticipated the rate would be 7% by the end of the year.” 

The Yahoo! Finance article notes that while rates are “taking their time decreasing,” there are indicators of improvement, however slow. What does that mean for house hunters looking at their options for summer and fall?

It’s More than Just the Numbers

News reports on the home loan interest rate are only part of the data house hunters should consider in 2024. The Core Logic Housing Price Index notes that home prices may increase 3.4% year over year from April 2024 to the same date next year.

Housing prices are often affected by housing inventory. When more homes are on the market than buyers, prices may come down.

However, in an environment with more house hunters than homes for sale, prices may trend higher due to demand.

Demand is not equally distributed across all housing markets. Some markets may have far more competition than others, and in such crowded markets, borrowers may be asked to forgo certain protections, like a contingency clause making the sale of the home depend on the home inspection.

It also affects your ability to negotiate with the seller for things like the 6% seller concession allowed under FHA mortgage loan rules in HUD 4000.1.

 In a more competitive housing market, your seller is far less likely to agree to the seller concession since some borrowers are likely bidding against you who won’t ask for it.

Should FHA Borrowers Wait?

Some say no. The promise of a housing market recovery has been in the air since market watchers began making their end-of-year predictions for home loan interest rates back in Q4 of 2023.

Those anticipated improvements never happened as expected, and there are too many variables to accurately predict when rates will creep closer to the low 6% range from where they are now.

One thing is certain. The market is not likely to return to the 5% FHA home loan interest rate range anytime soon. Borrowers hoping to hold out for such low rates may be waiting a long time.

If you need to consider buying a home soon, it may be wise to assume the rates you are offered when you apply to be close to “the new normal.”

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