If you were priced out of the housing market in 2023, you might have better luck finding an affordable home in 2024.
Mortgage rates are expected to decrease by nearly 1% by year’s end — from 6.6% down to as little as 5.75% — according to recent housing forecasts. That’s good news for buyers, as the decrease would reduce their monthly mortgage costs by roughly $200 for a median-priced home.
On Thursday, 30-year fixed mortgage rates slid to 6.6% after peaking at 7.79% in October 2023, per Freddie Mac data. That’s the lowest they’ve been since May 2023.
Rates in 2024 are expected to “moderate toward a more normal level,” with 30-year fixed averages dropping below 6% by the end of the year, according to a revised outlook published by Fannie Mae’s Economic & Strategic Research group on Thursday.
This lines up with other recent projections:
How much less mortgage payments could be in 2024
Assuming you make a 20% down payment on a median-priced home worth $431,000, the total monthly cost of a mortgage would drop by as much $190, according to CNBC Make It’s mortgage calculator. Here’s a look at the estimated totals based on projected 30-year fixed interest rates:
- 6.6% (current rate): $2,202
- 6.1%: $2,089
- 5.75%: $2,012
Over the course of the entire mortgage, that could amount to around $68,000 saved on interest.
Note that the totals are for the mortgage amount only and do not include additional expenses like private mortgage insurance, home insurance and property taxes.
While a reduced mortgage rate would provide some measure of cost relief to homebuyers, home prices are also expected to rise in 2024.
The National Association of Realtors expects a modest home price increase of 0.9% from 2023, Fannie Mae projects 2.4% and business intelligence company CoreLogic forecasts a year-over-year gain of 2.5%, as of November 2024. However, it’s worth noting that home price growth can vary considerably by region.
Whether it’s a good time to buy a home will depend on your personal finances and where you want to live. While a 1% drop in mortgage rates might not offer enough cost relief on its own, declining home prices in some regions — especially Florida — could make the difference.
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