The latest insights on inflation, housing affordability and mortgage rate cuts for 2024 — it’s all here from The Agency’s partners at New American Funding.
A Top-Level Summary
• The possibility of the Federal Reserve lowering interest rates three times or more this year (as previously hoped) has been effectively eliminated due to inflation stubbornly staying above the Fed’s target.
• Now, it is expected that the Fed will only make 1.5 “moves” this year—half as many as the Federal Open Market Committee/FOMC originally expected.
• The imbalance that exists in our real estate ecosystem is likely to persist for now and in the coming months.
• Lower rates in the future will bring more buyers into the market and the buyer pool will grow at a disproportionate rate to inventory.
Key Stats & Takeaways
• In Q1 of 2024, mortgage applications increased by 57%. Even with signs of higher inventory in Q1, the buyer pool grew at a disproportionate rate compared to inventory.
• The imbalance of supply vs. demand continues to put upward pressure on home prices.
SoCal Home Prices Hit Record High
Southern California home prices hit a record high in March amid sky-high mortgage interest rates. This combination is creating the most unaffordable housing market in generations. According to Zillow, the average for the six-county region reached $869,082 in March. That’s up 9% from a year earlier and 1% higher than the previous all-time high in June 2022.