US Housing Market Braces For Affordability As Mortgage Rates Ease: What Analysts Expect For 2024
Portfolio Pulse from Piero Cingari
Morgan Stanley predicts a 3-5% drop in home prices in 2024, indicating a shift towards more affordable housing as mortgage rates ease. Freddie Mac reports the average 30-year fixed mortgage rate at 7.44%. Homeowners' reluctance to sell low-rate mortgages has led to the least affordable market since the 1980s. Goldman Sachs expects a modest 3% price drop by end of 2024. Real estate stocks, including REITs, have seen a positive trend in November, with the Real Estate Select Sector SPDR Fund (XLRE) up nearly 10%, and the U.S. iShares Home Construction ETF (ITB) up nearly 19%.
November 21, 2023 | 4:06 pm
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The U.S. iShares Home Construction ETF (ITB) has experienced an extraordinary increase of nearly 19% month-to-date, leading U.S. equity industry performance.
ITB's remarkable growth is likely driven by investor optimism following analyst predictions of a more affordable housing market and lower mortgage rates in the near future.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
The Real Estate Select Sector SPDR Fund (XLRE) has seen a significant increase of nearly 10% in November, recovering from earlier losses in the year.
The positive trend in XLRE's performance is likely due to market anticipation of an improved housing market in 2024, as suggested by analysts' expectations of lower mortgage rates and more affordable housing.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80