Market Pulse August 2024 : Back to school, back to lower mortgage rates?

As kids head back to school, there is a renewed sense of optimism in the August air as we move towards autumn—and it’s not just about new beginnings in the classroom. Fall 2024 could also mean a return to somewhat lower mortgage rates, a welcome change for the housing market.

In mid-August, mortgage rates saw a slight uptick, with the average rate for a 30-year fixed home loan rising from 6.47% to 6.49%. But here’s the good news: these rates are still significantly lower than they were at this time last year.

Freddie Mac Chief Economist Sam Khater optimistically predicts that as inflation continues to cool, mortgage rates could start to trend downward in the coming months. The recent Consumer Price Index showed the lowest inflation levels since 2021, increasing confidence that the Fed may further cut rates.

Realtor.com economists are even forecasting that mortgage rates could drop to 6.3% by the end of 2024.

Brady Thomas of LaSalle Mortgage provided further mortgage rate insights at Abio Properties' recent "Say Hey" meeting, where Abio agents share market intelligence and best practices weekly.

"Good things are still in store. There are two things we are really looking at. One is inflation, which has come down from 9% all the way to 3%, so we have made a ton of headway there in the last 12 months. The other one is jobs. The next big jobs number comes out in early September, and the Fed meets in late September. That is expected to be the first rate cut they will do in almost 30 months," explains Thomas.

He also notes, "One thing to remember is that interest rates will move before the Fed makes a decision. That is what is happening now. The market is moving in anticipation of a Fed rate cut, and if they do just a 25-basis point rate cut, don't expect to see rates improve by a quarter of a percent that day. It's probably already priced in. Now if they cut more than 25 basis points, then that's when all bets are off, and we could see rates improve."

Spring’s typically bustling home-buying season may have been slowed this year by high mortgage rates, but with lower rates on the horizon, this fall could see an uptick in sellers listing homes and new opportunities for buyers.

Sources: Realtor.com, Freddie Mac, CPI Index (US Bureau of Labor Statistics), Brady Thomas/LaSalle Mortgage