65°Good evening

LOS ANGELES — Several housing economists are projecting that mortgage rates will ease moderately next year, though the forecasts call for the average rate on a 30-year home loan to remain above 6%.

While lower rates could help bring more buyers off the sidelines, the projected declines are unlikely to encourage homeowners who locked in rock-bottom rates two years ago to sell. That sets the stage for the housing market to remain constrained by a low supply of homes on the market, even if rates decline, economists say.

“The costs are going to remain high and we’re going to see a lot of people just choose to sit out,” said Danielle Hale, chief economist at Realtor.com.

Hale's forecast calls for the rate on a 30-year mortgage to average 6.8% in 2024, then slip down to 6.5% by the end of the year. At First American Financial, chief economist Mark Fleming predicts the average rate will range between 6.5% and 7.5%.

The National Association of Realtors’ latest forecast calls for the rate on a 30-year home loan to average between 6% and 7% by the start of next year’s spring homebuying season.

Forecasts from other housing economists also put the average rate somewhere in the 6% range in 2024. That’s still about double what the average rate was just two years ago.

Any decline in home loan borrowing costs would be welcomed by homebuyers that just five weeks ago were facing an average rate of 7.79%, the highest in over 20 years. The average rate fell to 7.22% this week, the lowest in 10 weeks, mortgage buyer Freddie Mac said Thursday.

As mortgage rates climb they can add hundreds of dollars a month to borrowers' costs, limiting what they can afford in a market that's already out of reach for many Americans. Even a modest decline in rates will help lower the cost of a home loan, improving affordability.

A bigger hurdle is the dearth of homes on the market, which has helped prop up home prices even as sales of previously occupied U.S. homes fell 20.2% through the first 10 months of the year.

A modest pullback in rates next year won't spur homeowners to sell, especially if they are reluctant to take on a mortgage with a higher rate. Consider, nearly 90% of homeowners with a mortgage had a rate of 6% or below as of the second quarter.

“This disincentive to sell is likely to persist as long as mortgage rates remain elevated,” Fleming wrote in his 2024 housing market outlook.

Video Player is loading.
Current Time 0:00
Duration 0:00
Loaded: 0%
Stream Type LIVE
Remaining Time 0:00
 
1x
    • Chapters
    • descriptions off, selected
    • captions off, selected
      Mangano appeals to high court ... Uncle Giuseppe's to open new store ... Freeport's Taylor builds basketball fan base Credit: Newsday

      Arrest in murder-for-hire plot ... Mangano appeals to high court ... FAA probing police use of helicopter ... Westbury ICE protest 

      Video Player is loading.
      Current Time 0:00
      Duration 0:00
      Loaded: 0%
      Stream Type LIVE
      Remaining Time 0:00
       
      1x
        • Chapters
        • descriptions off, selected
        • captions off, selected
          Mangano appeals to high court ... Uncle Giuseppe's to open new store ... Freeport's Taylor builds basketball fan base Credit: Newsday

          Arrest in murder-for-hire plot ... Mangano appeals to high court ... FAA probing police use of helicopter ... Westbury ICE protest 

          SUBSCRIBE

          Unlimited Digital AccessOnly 25¢for 6 months

          ACT NOWSALE ENDS SOON | CANCEL ANYTIME