If you look at the chart you will see how interest rates influence home sales. Look at 1982 as an example. As interest rates began to fall, the number of home sales began to rise. Then again starting in 1996 we saw rates falling and home sales rising.
Fast forward to 2021. Rates bottomed out at 2.74% then started rising. Almost simultaneously home sales began falling. Sometimes there is a lag, but if you look at the chart many times it’s instantaneous.
Interest Rates Influence Home Sales in 2024
Nobody knows for certain where rates will be in 2024. As I write this article the 10-year yield stands at 4.471%. Three weeks ago, it was at 4.934%, so it has fallen about a half percent in the last 3 weeks. Some believe the Fed is about done hiking rates. Others believe the Fed may have one more rate hike in them.
Keep in mind, mortgage rates are not directly tied to what the Fed does. The market sets its own rates more closely tied to the 10-year yield. This is why we study it so much. What the Fed does can influence the 10-year yield, but the markets can also buck whatever the Fed does and do their own thing too.
Most people we talk to believe interest rates will start coming down some in 2024. Most agree it could eventually get down into the 6’s somewhere, sometime between later 2024 or mid-2025. The average interest rate from 1971 through 2023 is 7.74% If rates come down into the 6’s, we could see a lot more buyer activity, which begs the question. If I am a buyer, should I buy now, or wait? We’ve written several articles on this. We believe if you need a home, buying sooner before rates fall might help you beat out other buyers who have also been waiting for rates to drop. We know that interest rates influence home sales.
Should Homeowners Sell Now?
This depends on your needs. Some say prices nationwide could fall further as rates stay in the 7’s, but could level off once they hit 6’s. Our advice would be, if the home isn’t working for you now, consider selling now. This is especially true if you’re selling and buying as you’ll be buying before rates fall and buyers jump back in.
Election
Truthfully, nobody knows where the economy will be in a year, what inflation will be, and what the election will look like in 2024. I saw an analysis the other day that showed election years tend to be steady until the uncertainty of who takes over shakes out. If this is true, we could see a steady year in 2024 with peak interest rates beginning or thinking about falling. This could set us up for a decent 2025.
Home Sales
We expect there to be about 4 million national home sales in 2023, and about 3.7 million in 2024. Unemployment may rise, which was the Fed’s goal to bring down inflation.
Florida may outpace the rest of the country once rate direction becomes established. Living anywhere in the South half of Florida might be a good bet, if you can afford it. Rising insurance and taxes are pushing some out while a new crop of buyers replaces them.
Always Call the Local Experts
The Ellis Team studies the market as well as anybody. Our team can guide you through your decision. We listen before we offer advice. We’re not here to sell you anything. Our goal is to help you make the best decision for your family. We might challenge you with some facts so you have something to think about. We don’t follow the herd mentality, rather what is right for you.
You can call us at 239-489-4042 or visit www.LeeCountyOnline.com and search the MLS like a pro. Your data will never be sold to 3rd party companies or other Realtors, so you won’t have 20 Realtors calling you by signing up. Your data is safe with us, and you will only hear from us. Now that’s a Thanksgiving deal worth celebrating!
Hope your turkey dinner was great. Let us know how we can help you!
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