DAYTON, Ohio (WDTN) – The housing market is heating up this year, with early signs showing that mortgage rates will continue to fall in 2024.
After the Federal Reserve announced plans to decrease interest rates in 2024 last October, mortgage rates responded by starting to drop.
“Right now, mortgage rates are in the mid to upper sixes,” Aaron Hedlund, associate professor of economics for Purdue University, said. “They were 8% but just a few years ago they were under 3%. So I think the likelihood is that rates will continue to decline, maybe close to the lower sixes or upper fives.”
According to Dayton Realtors, home prices in the Dayton area in December were up 10% compared to December 2022, with an average sale price of $254,718.
While the number of home sales stayed around the same between both months, the number of home listings were up last month compared to December 2022.
Hedlund said if mortgage rates continue to go down, more homes will come on the market.
“So many people have rates that are 3%, 3.5%, and therefore have not been wanting to sell because they don’t want to get a new house at a higher rate,” Hedlund said. “As rates come down to more reasonable levels, I expect that more homeowners list their house for sale.”
Hedlund said what the Federal Reserve is looking for when dropping interest rates is inflation to get down to a steady 2%. Current reports show the Fed likely won’t start dropping rates until June.
However, Hedlund says it should still be slightly easier this year for people to buy a home, and it’s looking even brighter for the future.
“As long as the economy continues to kind of gradually get to a more normal posture, 2025 should hopefully be a more normal year for the housing market,” Hedlund said.
