Will mortgage rates finally go down in 2024?

house and house key with calculator and mortgage rates — "It looks like next year will remain a challenging time to buy a house."

(Image credit: Getty Images)

Mortgage rates shot to record highs in 2023, topping 8% for the first time since 2000. According to Nerdwallet, the 30-year fixed-rate mortgage rate as of late October marked an increase of "two full percentage points from lows near 6% back in February." All of that to say, a lot can happen to mortgage rates in a year, which raises the question: Where are mortgage rates expected to head in 2024?

After a trying time for many in the housing market, potential homebuyers are likely hoping a reprieve is somewhere on the horizon. Here's a look at where predictions lie for the new year when it comes to mortgage rates as well as home prices and housing inventory.

Will mortgage rates finally go down in 2024?

According to Insider, "the wait for lower rates may soon be over." However, Insider added, "rates probably won't go back to the historic lows we saw in 2020 and 2021."

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More specific mortgage rate predictions for next year vary depending on who you ask, though "the general consensus is that mortgage rates should finally drop back below 7% in 2024," per Insider. The National Association of Realtors has the rosiest outlook for 2024, predicting that 30-year mortgage rates will be around 6%, while Fannie Mae forecasts rates falling between 6.7% and 7.1%, Insider reported.

What's expected for home prices and inventory in 2024?

Mortgage rates are a large factor in the homebuying equation, but they're not the only one. Home prices and inventory levels also play a big role — as Insider noted, "once rates fall, homebuyers will likely have other challenges to contend with, including increased competition and rising home prices."

According to Bankrate, home prices, which have already "been on fire lately," aren't expected to moderate in 2024. "Home prices will rise around 3 to 4 percent," Lawrence Yun, chief economist of the National Association of Realtors, predicted in an interview with Bankrate.

It's worth noting, however, that while many experts agree with this prediction, there are some outliers. As CNBC Make It noted, "based on declining affordability and more homes being built, both Moody's Analytics and Morgan Stanley expect home prices to fall slightly in 2024."

Housing inventory, meanwhile, is likely to remain low in 2024, though there may be some increases. "Sellers are likely to remain reluctant to give up their low interest rate for a much higher one, so inventory will remain constrained. As more time passes, more homeowners may be 'forced' to sell due to life events, so inventory may rise from the current anemic levels, but it's unlikely to increase much," Chen Zhao, who leads the economics team at Redfin, told Bankrate.

Is 2024 going to be a better time to buy a house?

As Bankrate explained, "with mortgage interest rates still stubbornly high and housing inventory stubbornly low, it looks like next year will remain a challenging time to buy a house." That said, if mortgage rates do decline as predicted, that could shift things a bit in the direction of buyers. Lower mortgage rates could mean that "homeowners locked into their previous lower rates might finally choose to sell, which would add much-needed inventory to the market," Bankrate explained.

Still, that combination of higher inventory and lower rates could add challenges as well. "While buyers may have a lower rate in 2024, there will be more buyer competition next year, which will drive prices higher," Karen Kostiw, a real estate agent with Coldwell Banker Warburg in New York City, told Insider.

Instead, per Kostiw, "buyers should grab a deal now at a lower price and refinance next year if rates do fall." With that approach, however, you have to be willing to take a bet that 2024 predictions will prove right.

Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.