When mortgage rates fall, home prices typically go up as buyers step in. But next year, both rates and prices could drop. Here’s the thinking: If inflation fears ease and interest rates start to decline, buyers may hold out for still lower rates; sellers, in turn, might need to cut their prices to close deals.
Real-estate listings website Realtor.com figures mortgage rates will drop to 6.5% by the end of next year, from 7.22% recently. The median home price. in turn, will slump 1.7% in 2024, the site says. That would be the first full-year drop since 2011, when prices bottomed after the 2008-09 financial crisis.
Higher rates snuffed out double-digit home price gains in 2022, as both buyers and sellers were sidelined. If the Federal Reserve tempers its stance on monetary policy, and rates continue to ease, buyers may wait to see how it all unfolds. “The longer you wait the better your mortgage rate is going to be, especially if prices also soften,” says Realtor.com chief economist Danielle Hale. (Barron’s parent company, News Corp, owns Move, which runs Realtor.com and Move.com).
A slump wouldn’t be uniform. Of the 100 large metro areas in Realtor.com’s forecast, 63 are likely to see prices rise in 2024. Inventory constraints in some markets will curtail sales, keeping prices high, Hale says. Among the biggest projected losers: Austin, St. Louis, and Spokane, Wash., which are reverting to norms after prices climbed during the pandemic, she says.
Write to Shaina Mishkin at [email protected]
Last Week
Markets
Stocks fell to start the week, then rallied. The dollar hit a three-month low, Treasury yields slid, and global bonds surged on rate-cut expectations. Third-quarter growth came in at a hot 5.2%. On the week, the
Dow Jones Industrial Average
topped 36,000, up 2.42%; the
S&P 500
hit a 2023 high, up 0.77%; and the
Nasdaq Composite
rose 0.38%.
Companies
Consumers spent $9.8 billion online on Black Friday, up 7.5% from 2022, and a record $12.4 billion on Cyber Monday.
Apple
took the first steps to back out of its credit-card deal with
Goldman Sachs.
Tesla
introduced its $60,990 (and up) Cybertruck.
Walt Disney
restored its dividend.
Deals
Offshore creditors supported a last-ditch restructuring of China
Evergrande
debt to avoid liquidation. The deadline: Monday…The Wall Street Journal reported that Elliott Management had taken a more than $2 billion stake in wireless tower company
Crown Castle,
that
Cigna
and
Humana
were holding merger talks, and that Neiman Marcus rejected Saks Fifth Avenue’s $3 billion offer…China fast-fashion company Shein filed for a U.S. IPO…Miriam Adelson sold $2 billion in
Las Vegas Sands
stock to buy a majority stake in the NBA’s Dallas Mavericks from Mark Cuban.
Milestones
Charlie Munger, Warren Buffett’s longtime partner at
Berkshire Hathaway,
died at 99 in a California hospital. Former Secretary of State Henry Kissinger, died at 100, as did the first woman on the U.S. Supreme Court, Sandra Day O’Connor, at 93.
Write to Robert Teitelman at [email protected]
Next Week
Tuesday 12/05
The Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey. Economists forecast 9.35 million job openings on the last business day of October, roughly 200,000 fewer than in September. There are currently 1.5 open positions for every unemployed worker, down from a peak of two in March of 2022, but still historically elevated.
The Institute for Supply Management releases its Services Purchasing Managers’ Index for November. Expectations are for a 51.8 reading, which would equal October’s number.
Thursday 12/07
Broadcom
reports fourth-quarter fiscal 2023 results. The semiconductor company recently closed its $60 billion-plus acquisition of cloud-computing firm VMware. Analysts expect Broadcom to earn $10.96 a share for the quarter on sales of $9.3 billion.
Friday 12/08
The BLS releases the jobs report for November. Consensus estimate is for an increase of 175,000 in nonfarm payrolls, 25,000 more than in October. The unemployment rate is expected to remain unchanged at 3.9%. Jobs growth has slowed this year to a still-solid average of 238,800 a month after two years of average monthly gains of slightly more than 500,000.
Email: [email protected]
Read the full article here