Market Update – November 22, 2024: Key Insights for Mortgage Rates & Real Estate Trends
Friday, November 22, 2024
Welcome to this week’s Market Update! Here, we provide the latest insights on mortgage rates, real estate trends, and key economic factors. Whether you’re buying, selling, or just tracking the market, this update will keep you informed.
Mortgage Rates & Economic Outlook: What’s Happening?
Mortgage rates have held steady this week, but experts expect them to decline through the end of 2024 and into 2025. The slowdown in the U.S. economy, easing inflation, and potential Federal Reserve interest rate cuts are all contributing factors.
The 30-year fixed mortgage rate is projected to drop to the low 6% range by the end of 2024, and possibly dip into the high 5% range early next year. While this is welcome news for homebuyers, there’s one catch: home prices have continued to rise.
Key Economic Data from Nov 15–Nov 21, 2024
Here’s a snapshot of important economic events from the past week and what they mean for the market:
| Date | Event | Actual Data | Forecast | Previous Data | Commentary |
|---|---|---|---|---|---|
| Nov 15, 2024 | Retail Sales (October) | +0.4% MoM | +0.3% | +0.8% | Retail sales continue to show growth, particularly in electronics, auto sales, and food services. |
| Nov 19, 2024 | Housing Starts (October) | 1.311 million | 1.33 million | 1.354 million | A 3.1% drop in housing starts, due in part to hurricane disruptions and high mortgage rates. |
| Nov 21, 2024 | Initial Jobless Claims (Nov 16) | 213,000 | 220,000 | 217,000 | Fewer jobless claims suggest a stable labor market. |
| Nov 21, 2024 | Existing Home Sales (October) | +3.5% MoM | 3.93 million | 3.84 million | A positive rebound in home sales, especially in the Northeast and West. |
Will Homebuyers See Lower Rates in 2025?
Many homebuyers are waiting for mortgage rates to fall below 6%. However, that may not happen until 2025. In fact, 85% of homebuyers surveyed in March 2024 said they would only buy if mortgage rates dropped below 6%. But here’s the challenge: while rates may eventually come down, home prices continue to climb. Since the start of 2024, home prices have risen by 4.5%, according to the S&P CoreLogic Case-Shiller Home Price Index.
What does this mean? If you’re waiting for rates to fall before buying, you could end up paying more for a home as prices rise. It’s important to weigh your options carefully.
The Impact of Climate Risks on Home Values
In an interesting shift, homes in climate-risk areas (like those prone to floods, wildfires, or hurricanes) are increasing in value faster than homes in low-risk areas. It may sound surprising, but homebuyers are now factoring climate resilience into their purchasing decisions. As people become more aware of environmental risks, properties that are more resilient to these risks are gaining in popularity and value.
This trend could continue as environmental factors play an even bigger role in the housing market moving forward.
Federal Payroll Overview: A Look at U.S. Government Employment
The U.S. government employs 2.3 million civilians, with the majority (70%) working in military and security-related agencies. The Veterans Affairs department is the largest civilian employer, with 486,522 employees, mainly in hospitals and healthcare. Other large agencies include:
- Department of Homeland Security: 222,539 employees
- U.S. Army: 221,043 employees
- Navy: 216,537 employees
- Air Force: 168,505 employees
The Education Department is the smallest, with just 4,425 employees.
The federal payroll totals $213 billion annually, which is nine times the size of the FY24 federal deficit ($1.83 trillion).
Fed Watch: What’s Next for Interest Rates?
The Federal Reserve is under close scrutiny as it considers further interest rate cuts. These decisions will directly impact mortgage rates and could have a significant effect on the housing market. With an eye on economic growth, many analysts predict that the Fed will continue to lower rates, which may create favorable conditions for homebuyers in early 2025.
Conclusion: What’s Coming Next for Mortgage Rates and Housing?
As we approach the end of 2024, homebuyers may find themselves in a more competitive market. Mortgage rates are expected to continue their gradual decline, but home prices remain on the rise. If you’ve been waiting for rates to dip below 6%, it might take a little longer than expected. However, lower rates in 2025 could offer some relief.
In the meantime, keep an eye on the overall economy, as well as local housing trends—especially if you’re buying or selling in a market with climate risks. With home prices continuing to appreciate, waiting too long could cost you more in the long run.