Polarizing Projections: Fitch Ratings vs Realtor.com on Home Price in 2024

25 December 2023 - 263 views

Fitch Ratings predicts that home prices may increase after the Federal Reserve cuts rates next year, further exacerbating an already overvalued housing market. Fitch expects the interest rates to be lowered by 75 basis points in 2024. This projected increase in home prices will impact affordability, especially for entry-level and first-time homebuyers, potentially dampening demand. Currently, 88% of US metro areas are overvalued, with a widening margin. However, not all experts agree with Fitch’s projections, as Realtor.com predicts a 1.7% dip in home prices in 2024 due to lower mortgage rates affecting demand.

[Mixed Scenario]
[Significance: Medium]

1. Fitch Ratings predicts that home prices will increase after the Federal Reserve cuts rates next year, further exacerbating an already overvalued housing market.
2. Fitch expects the Federal Reserve to reduce interest rates by 75 basis points in 2024, aligning with the central bank’s own projections.
3. Home prices are projected to rise by 0%-3% in 2024 and then experience a 2%-4% boost in 2025, impacting affordability for entry-level and first-time homebuyers.
4. According to Fitch, 88% of metro areas in the US housing market were overvalued as of the second quarter, with the degree of overvaluation widening from the previous year.
5. However, real estate website Realtor.com disagrees with Fitch’s projections and foresees a 1.7% decrease in home prices in 2024 due to lower mortgage rates reducing buyer urgency. The US housing market in 2023 was already deemed the least affordable on record.

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