PHILADELPHIA — The U.S. housing market is pushing buyers and sellers in opposite directions, as one group struggles for affordability while the other is locked into low rates.
“It’s a tale of two markets,” Priscilla Almodovar, chief executive of Fannie Mae, told CNET in an interview on the sidelines of the Mortgage Bankers’ Association annual conference in Philadelphia.
“Homeowners are doing well because they likely have a lot of equity in their home. They probably have a 2%, 3%, 4% mortgage,” she explained, but are constrained by “a lock-in effect of not giving up on that mortgage.”
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About 92% of U.S. homeowners with a mortgage have a rate below 6%, according to a June analysis by Redfin. But as the 30-year mortgage rate approaches 8 percent, homeowners find little incentive to sell their homes, since they may have to buy another one with a higher interest rate.
On the other hand, buyers are also facing mortgage rates at a 23-year high and low inventory due to homeowners not selling. The inventory of homes for sale decreased 4% in September compared to the same period last year, according to Realtor.com.
Fannie Mae expects mortgage rates to remain in the 7% range for most of 2024, before ending next year at 6.7%, according to its latest forecast.
“We expect the higher mortgage rate environment to continue to dampen housing activity and further complicate housing affordability through 2024,” said Doug Duncan, chief economist and senior vice president of Fannie Mae, in a press release.
Learn more: Mortgage bankers expect the 30-year rate to fall to 6.1% by the end of 2024
2023-10-17 05:41:33
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