WASHINGTON - Fannie Mae has revised its mortgage rate forecast, now expecting rates to decline to around 5.8% by the end of the year. This adjustment comes as the Federal Reserve signals a more relaxed approach to its monetary policy, which may lead to more affordable borrowing costs for homebuyers. Concurrently, Freddie Mac has reported a decrease in the average fixed mortgage rate to about 6.60%, marking the lowest point since May of the previous year.
The housing market is set to witness growth against this backdrop of falling mortgage rates. Home sales are projected to reach nearly 5 million annually, while housing starts are anticipated to climb to over 1.3 million. Furthermore, home prices are expected to see a moderate uptick, with the home price index forecasted to rise by over 3% throughout this year.
These developments suggest a potential easing of the challenges faced by the housing market, which could bolster homebuyer confidence and stimulate home sales and construction activity. With mortgage rates retreating from their recent highs, the housing sector may be poised for a more robust performance in the coming months.
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