The decline in mortgage rates and optimism about future cuts helps boost the confidence of homebuilders and mortgage brokers.
Mortgage rates have dropped from their peak in late October, falling below 7% for the first time since August. With the Federal Reserve indicating no plans to raise the benchmark interest rate, mortgage rate forecasts are more optimistic than they have been since the onset of the current inflation cycle.
Relief for Homebuilders
Homebuilders are starting to feel some relief. The National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index rose to 37 in December, compared to its November reading of 34, indicating the first positive movement in the index in four months. This is higher than economists’ forecasts for December.
Improved Mortgage Outlook from the Mortgage Bankers Association
There are also improved expectations from the Mortgage Bankers Association (MBA) in light of declining interest rates. The association predicted on Monday a 6% increase in existing home sales and a 10% increase in new home sales next year. It also anticipates a 17% increase in the number of mortgage loans originated in 2024.
Mortgage Bankers Association Forecasts Align with Housing Market Index Data
The Mortgage Bankers Association’s forecasts align with data from the Housing Market Index, which showed that homebuilders’ expectations for single-family home sales over the next six months rose to 45, a two-point increase from the previous month.
These developments indicate an improvement in the real estate market in 2024 and boost the optimism of homebuilders and mortgage brokers. The decline in mortgage rates and expectations for further cuts in the future enhance builders’ and brokers’ hopes for a better market and increased sales next year.
Source: https://www.investopedia.com/home-builder-mortgage-broker-optimism-move-higher-8417638
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