Fannie Mae predicts housing slump until 2026; 30% price drop needed, 6.6% mortgage rates forecast for 2024.

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Let’s dive into the latest scoop on the housing market, and folks, it’s not looking too rosy.

Fannie Mae, the big player in the mortgage game, just dropped a bombshell prediction: the housing market might remain in a slump until at least 2026 unless prices take a nosedive of over 30%. That’s a tough pill to swallow for those dreaming of that idyllic sub-6% mortgage rate.

Speaking of rates, Fannie Mae expects the 30-year fixed-rate mortgage to average a hefty 6.6% in 2024, climbing down to 6.2% in 2025. Looks like we’ll be stuck with higher rates for a while longer, folks.

And the impact? Both existing and new home sales are taking a hit as interest rates climb higher, sending shockwaves through the market. Even the Fannie Mae Home Price Index is feeling the pressure, with forecasts showing a modest 3.2% increase in 2024.

But hold on to your hats, because there’s more. Purchase origination volume is expected to reach $1.4 trillion in 2024, a slight bump from 2023 but not quite the leap expected. Refinance origination volume is also downgraded, signaling tightening financial conditions ahead.

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Goldman Sachs adds to the gloom, stating that financial conditions are tightening up. Is this the start of an early spring for the housing market, or are we witnessing a listing explosion?

And here’s an interesting tidbit: Saturdays usually see the peak of listings each week, but it seems Davidson County in Greater Nashville is leading the charge with this trend, accounting for about 40% of the market.

In the midst of all this, the Mortgage Bankers Association reports a decrease in mortgage applications in their weekly survey, adding another layer to the complex puzzle of the housing market.

So, what’s the verdict? Well, it’s a rollercoaster ride of ups and downs, twists and turns. Buckle up, folks, and let’s see where this wild ride takes us next.

Sources:


https://www.fanniemae.com/research-and-insights/forecast/economic-developments-march-2024





https://www.calculatedriskblog.com/2024/03/mba-mortgage-applications-decreased-in.html

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