Mortgage rates ease: Why 2024 shows promise for homebuyers
After a volatile 2023, the housing market enters 2024 with some relief as two major headwinds — high mortgage rates and inflation — show signs of easing. This backdrop has sparked cautious optimism for a rebound after affordability challenges crushed demand.
Yahoo Finance's Brad Smith and Brian Sozzi discuss the improving outlook for housing in 2024 now that rates and consumer prices are moderating, providing insights into homebuilder strategies.
For more Yahoo Finance housing coverage:
'Silver tsunami' to reshape the housing market: Meredith Whitney
2024 home buying season will be better than 2023: Economist
Can homebuilder stocks defy the odds in 2024?
Housing market has looked 'bubblicious': Economist
Top housing markets for 2024: Realtor.com
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
BRAD SMITH: 2023 was a year of highs and lows for the housing market. Affordability continues to be a concern for homebuyers. But two of the sector's biggest foes are finally retreating, mortgage rates and inflation. There may be some surprising resilience for housing in the year ahead here.
And a lot to break down particularly a few things. Number one is where the rates move next year. And that's going to determine the effects of the supply and demand side of the market. And on the supply side, particularly, it's the number of existing homes that are not listed because rates are not in a favorable position for the people that are in those homes to then enter into a new 30-year or whatever the term is mortgage that they might be looking at as well.
BRIAN SOZZI: Yeah. Really tricky time to just study housing more broadly. If you have a pool of 75 million millennials that may come back into the housing market during the spring buying season, that, of course, is something to watch. But I'm also watching if home builders can continue to jack up prices.
Toll Brothers reported in early December. And a nugget that I think got lost in their overall earnings release is that they jacked up prices, $16,000 in their most recent quarter. And didn't see a real complete fall off in demand. They actually saw contract value pretty strong. So can Toll Brothers continue to do that over the next, really, year? And then will others follow suit? And then are those 75 million millennials, are they able to finally own a home and buy a home, if all these home builders are lifting prices?
BRAD SMITH: And remember, Toll Brothers on that luxury end of the market. So if they're servicing a customer that has more ability to purchase, even in this environment, there's less of a thought or less of a risk that they would step off of that purchase decision even right now, as challenging as it may be when you look at other consumer groups or potential home buying groups there as well.
But then you also have to think about what they're doing right now in just building homes and expecting demand to fill or backfill in this process that they call specking within the home or new homes market as well.
BRIAN SOZZI: It hasn't been a good year for home improvement retailers. I was looking back at some of the results that Lowe's and Home Depot have reported throughout the year. Those sales and those profits have really decelerated. People are not out there buying washing machines. They're not out there buying dryers. It is really slowed down, as people just don't have any more home left to remodel because of all the remodeling they did during the pandemic.
