(NewsNation) — The average long-term U.S. mortgage rate dropped to 6.95% — its lowest level since early August.
This should bring some relief for hopeful homebuyers who have been having to grapple with higher borrowing costs and heightened competition.
Recently, inflation has been easing, and Wednesday the Federal Reserve kept its key interest rate unchanged for a third straight time while hinting they could actually start cutting it next year.
That’s “good news” for prospective homeowners, says Lynette Khalfani-Cox, a financial expert known as “The Money Coach.”
Prospective rate cuts in 2024 will likely draw would-be buyers in the marketplace, she said.
“The second half of 2024 is going to be far better for prospective buyers than the early part of the year,” Khalfani-Cox said. “So I caution a little bit of the wait-and-see approach.”
Khalfani-Cox isn’t alone in her assessment: Sam Khater, Freddie Mac’s chief economist, says there will likely be a “gradual thawing” of the housing market in the new year.
The National Association of Realtors is also predicting an improved outlook for buyers in 2024.
NAR Chief Economist Lawrence Yun expects home sales to begin rising by 13.5% in 2024, and the median home price to reach $389,500 — an increase of 0.9% from this year.
“The demand for housing will recover from falling mortgage rates and rising income,” Yun said in a statement. “In addition, housing inventory is expected to rise by around 30% as more sellers begin to list after delaying selling over the past two years. The selected top 10 U.S. markets will experience faster recovery in home sales.”
Rent prices could also come down in 2024, Yun said.
Still, there are lingering questions about affordability and low housing inventory, Khalfani-Cox said.
“We need to have more housing stock in this country also to help bring down prices,” she added.
When it comes to whether one is ready to make the leap to home ownership, though, that depends on someone’s own unique circumstances, Khalfani-Cox says.
That means taking account of one’s credit, what their down payment would be and if they can handle the responsibilities of having a house, she said.
” I think a lot of times people just forget — they think like, ‘Oh, can I afford this mortgage, the principal interest, taxes and insurance?'” Khalfani-Cox said. “But there are a whole host of other costs that go along with being a homeowner, to utilities, moving costs, furnishing the house.”
The Associated Press contributed to this report.