The Cascade Team Blog

Total home sales are expected to come in lower than previously expected and will not pick up meaningful into mid 2025. This is according to a new forecast from the Fannie Mae Economic and Strategic Research Group. This new forecast downgrades total home sales to 4.78 million in 2024 and 5.19 million in 2025, with no expected upswing until income growth starts to outpace home price growth and mortgage rates sink closer to the 6% level. The forecast doesn't expect the rates to go below 6% until the end of 2025.

Furthermore, the new forecast warned that near-term slowdown in housing starts is coming because the number of new homes for sale that are already under construction is up, which is likely to delay new projects until the current inventory can be sold. 

after absorbing recent economic data, bond market participants now appear to expect slower paths for economic growth and inflation, which contributed to a softening in mortgage rates over the last few weeks. This lower rate environment should be good for home sales by helping loosen the grip of the so-called "lock-in effect", in  addition to aiding affordability more generally. However, high frequency data, such as mortgage applications, home showing requests, and listings views, suggest that many potential homebuyers remain reluctant to make the jump. 

Even with moderately lower mortgage rates, affordability remains close to historic lows due to the high level of home prices relative to incomes. We are therefore expecting continued sluggishness in home sales over the rest of the year. One bright spot for the mortgage industry has been the recent uptick in refinance applications, albeit from very low levels.

What are your thoughts surrounding our current market state?

And as always, here to help with all of your Real Estate concerns,

Tom

Integrity, Experience and Commitment

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