On December 13 the Federal Reserve held the Federal Funds Rate at its current level and indicated plans for three rate decreases in 2024. Mortgage rates responded with a drop from 7.1% to 6.6% within 2 days, where they have stabilized—down about 1.4% since October’s 8.0% peak. On a $400,000 loan, that’s $380 off the monthly payment.
From the vantagepoint of the annual holiday lull, it’s a bit difficult to project how lower rates will affect supply, demand, and overall activity going forward. Theoretically, they may create more market demand and favorably impact sales volumes for homes under $1 million. More affordable rates might finally create opportunities for sellers who have been locked in for the past few years and free up their properties. On the buyer side, they could enable buyers to move up or get out of the rental market.
November to December 2023, the supply-demand index declined from 109.4 to 105.1, with a small rise in supply and minor decrease in demand.
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