{"id":5234,"date":"2023-10-25T06:22:54","date_gmt":"2023-10-25T06:22:54","guid":{"rendered":"https:\/\/infundpros.com\/finance\/with-mortgage-rates-near-8-goldman-sachs-expects-home-prices-to-fall-then-rebound-in-2024\/"},"modified":"2023-10-25T06:22:55","modified_gmt":"2023-10-25T06:22:55","slug":"with-mortgage-rates-near-8-goldman-sachs-expects-home-prices-to-fall-then-rebound-in-2024","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=5234","title":{"rendered":"With mortgage rates near 8%, Goldman Sachs expects home prices to fall, then rebound in 2024"},"content":{"rendered":"
\n

Home prices will fall for the rest of the year due to high mortgage rates and a low supply of houses for sale, Goldman Sachs
\n GS,
\n -0.01%<\/bg-quote>
\n says in a new note.<\/p>\n

\u201cWhile the sharpest declines in housing activity and prices are now long behind us, the recent jump in mortgage rates and the prospect that they are likely to remain elevated for the foreseeable future present headwinds to the economy\u2019s most interest rate sensitive sector,\u201d the Wall Street bank\u2019s analysts wrote in an Oct. 22 note.<\/p>\n

\n

As a result of higher rates straining affordability, as well as creating a disincentive for existing homeowners to sell their\u00a0homes, Goldman expects home sales to fall to the lowest level since the early 1990s to a pace of 3.8 million sales per year in 2024.<\/p>\n

Even though home prices have increased by 4.2% so far in 2023, the analysts noted, they \u201care likely to fall 0.8% through December for a +3.4% year-over-year increase.\u201d<\/p>\n

The median price of a home was $412,000 in September, meaning half of homes were cheaper and half were more expensive, according to real-estate brokerage Redfin\u00a0RDFN,\u00a08.82%. With a 30-year mortgage at 8%, a buyer would need to make over $120,000 to afford the monthly payments on a home at the price.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

Home prices will fall for the next few months\u00a0<\/strong><\/h2>\n

Goldman Sachs also expects home prices to fall in the winter and rise in March of 2024.<\/p>\n

Factoring in the supply of homes for sale, buyer demand, housing affordability, and home prices, the bank expects home prices to continue increasing for the next few months (as the Case-Shiller index that they use lags behind by a few months) before \u201cslowing sharply\u201d and falling by the end of the year.<\/p>\n

The bank\u2019s model shows home prices falling in January and February of 2024, before rising again for the rest of the year. But unlike prior years, home price growth will be muted, the analysts stressed. Home prices are only expected to rise 1.3% over the full year of 2024 \u201cas supply remains tight but high rates weigh on affordability.\u201d<\/p>\n

Mortgage rates will stay in the 7% range for the time being<\/strong>, Goldman says<\/h2>\n

Rising mortgage rates also hurt home-buying demand. Applications for mortgages in recent weeks have plunged to the lowest level in 28 years. The 30-year fixed rate mortgage was averaging at 7.91% as of October 23, according to Mortgage News Daily.<\/p>\n

Goldman Sachs\u2019s forecast expects mortgage rates to \u201cremain elevated for the foreseeable future, dipping to just under 7% by the end of next year.\u201d<\/p>\n

In the chart below by Goldman Sachs, it\u2019s clear that nearly all borrowers with an outstanding mortgage have a rate below the current 7%. Over 60% have rates that are four percentage points below today\u2019s level (around 3%), which is \u201cstrongly disincentivizing them from moving,\u201d the analysts stated.<\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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