A Market of Extremes: Sellers and Buyers Struggle to Find Common Ground

The U.S. housing market is witnessing a divergence between buyers and sellers, creating what MarketWatch calls a "tale of two markets." Homeowners with low mortgage rates are reluctant to sell and are constrained by the prospect of higher rates, while buyers face the challenge of rising mortgage rates and low inventory.

Roughly 92% of Americans with home mortgages have rates below 6%, and as the 30-year mortgage rate nears 8%, those same homeowners are hesitant to sell. Along with a subsequent decline in inventory, Fannie Mae expects mortgage rates to remain around 7% through most of 2024, affecting housing affordability.

On the flip side, buyers are also contending with mortgage rates at the highest level in 23 years, and are dealing with low inventory due to homeowners not selling. Inventory of homes for sale shrank by 4% in September as compared to the same time last year, according to Realtor.com.

Fannie Mae expects mortgage rates to stay in the 7% range through most of 2024, before ending next year at 6.7%, according to its latest forecast.

“We expect the higher-mortgage-rate environment to continue to dampen housing activity and further complicate housing affordability into 2024,” Doug Duncan, chief economist and senior vice president at Fannie Mae, said in a statement.

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