Mortgage rates have already fallen for nine consecutive weeks and are expected to drop further in 2024, although they are not likely to go below 6%. The average rate for a 30-year fixed-rate mortgage has dropped nearly a whole percentage point this year, landing at 6.61% in the final week of December. The Federal Reserve’s historic campaign to rein in inflation through interest rate hikes had a powerful impact on the housing market, cutting demand as rates surged and pushing would-be homebuyers out of the market. Lawrence Yun, chief economist at NAR, said he expects the 30-year fixed mortgage rate to average lower, at 6.3% in 2024, and that the Fed will cut rates four times. That could calm inflationary conditions, in response to slower economic activity. NAR’s latest forecast calls for the median home price to go up slightly, reaching $389,500 in 2024, an increase of 0.9% from this year. With mortgage rates now at 6.6%, the average American family can afford to purchase the median-priced home without allocating more than 30% of its income, a standard threshold for affordability, according to NAR.

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