The key determinant impacting housing demand in these areas is the influx of additional buyers resulting from the decline in mortgage rates next year.
Even more home building will be needed with the housing shortage persisting in most markets.
The Fed indicated yesterday that they will hold the Fed Funds Rate steady for now and cut rates three times in 2024; NAR forecasts that mortgage interest rates will average 6.3% in 2024.
The total number of housing units increased from 264.9 million units in 2012 to 287.5 million units in 2022.
At the national level, housing affordability fell month-over-month and year-over-year in October 2023.
Inflation notched down to 3.1% in November despite the incomprehensible rise of nearly 7% growth in housing rent.
Jobs are still being added to the economy, with 199,000 net new payroll gains in November 2023.
The 30-year fixed mortgage interest rate hit an average of 7.03% this week. In just 6 weeks of decline, this makes a considerable difference for a home buyer purchasing a $400,000 home.
Mortgage interest rates dropped again to 7.22% from 7.29% last week; the drop from the October peak of 7.79% translates into a $125-a-month savings on a $400,000 mortgage.
The three-week drop in mortgage rates is a steady sign that they have likely hit a peak and are headed down.
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