The United States’ housing market has been passive over the past few years due to rising interest as well as persistently high levels of inflation. S&P Global Ratings, said despite its restrains, the credit rating agency expects mortgage origination and securitization activity to rise year over year in 2024 as the economy begins to normalize.
The housing market has proven resilient to a certain extent with the national home purchase-only seasonally adjusted Federal Housing Finance Agency home price index was up 6.2% between December 2022 and October 2023, based on the report of S&P Global Ratings.
The report added, during 2023, the upward price pressure from supply constraints dominated the downward pressure from elevated mortgage rates.
The research also noted the arrangement of hybrid work system has begun to take a normalized form of setup for most workplaces in 2023, where people migration will not just depend on the economic factors of the country but also the newfound flexibility in the workforce.
Secondary cities in the United States such as Texas, Arizona, Florida, and Carolina, are also likely to benefit from the overpriced coastal areas, especially now that remote or hybrid nature of work has largely stabilized in most business industries.
S&P Global Ratings projects non-agency issuance for a 30% rise in volume to $100 billion reflecting the possibility of better financing prospects as estimated downward path of interest rates comes into sharper emphasis, proportionately more than origination volume. Non-agency volume was roughly $78 billion in 2023, down from $140 billion in 2022.
Jeremy Schneider, Primary Credit Analyst from S&P Global Ratings said the markets for housing and mortgages will likely be invigorated in 2024 to the extent the Fed begins to cut its benchmark rate, benefitting borrowers as mortgage rates follow suit.
It is evidently understood that cooling interest rates will lead to a surge in demand for housing as increase pressure on prices, ultimately resulting in a bloated inventory. In this scenario, rental market is seen the best to flourish, depending highly on the economic affordability of buyers.
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