The latest market data shows both challenges and opportunities for real estate agents as we head into the final quarter of 2024.
Mortgage Rates
Although rates remain near their lowest levels since February 2023, there’s been a slight uptick of 0.1% following the Federal Reserve’s decision to lower base rates on September 18. Despite the cut in short-term rates, this long-term interest rates have increased slightly, contributing to uncertainty in the market. For agents, this means potential buyers may be hesitating, unsure of whether rates will fall or stabilize.
Home Sales
August saw a 2.3% drop in existing home sales, hovering around multidecade lows. Sales are currently running approximately 30% below the long-term average, even when adjusting for population growth. This sluggishness stems from affordability issues, with many potential buyers still “on the fence.” The good news? Mortgage Bankers Association (MBA) purchase data suggests some early signs of improvement.
Affordability Issues
The combination of higher home prices and interest rates continues to strain affordability, especially for first-time buyers. Agents should be prepared to work closely with clients, helping them navigate financing options and understand how potential rate movements could impact their purchasing power.
Investment Opportunities in Mortgage-Backed Securities (MBS):
MBS remains an attractive option for investors, with rates relatively high compared to similar bond market instruments. With spreads historically wide, there is room for mortgage rates to decline further even if the general long term rate environment trades flat, which could present an opportunity for agents as more affordable financing becomes available.