US mortgage rates are forecast to stay above 7% in 2024

oldman Sachs Research forecasts US mortgage rates in the coming year to be higher than it previously expected. Home prices are also projected to increase even as borrowing costs remain elevated.

As interest rates have risen, 30-year mortgage rates are now expected to be 7.6% at the end of 2023, up from the previous estimate of 7.1%, Goldman Sachs Research analysts Roger Ashworth and Vinay Viswanathan write in the team’s report. Similarly, the forecast for rates at the end of 2024 now stands at 7.1%, up from 6.8% previously. At the end of 2025, rates are predicted to be 6.6%.

Meanwhile, homes have appreciated despite the rise in borrowing costs. Prices grew in August by 0.9% month-over-month, reflecting an annualized 11% pace, according to Case-Shiller data. “The continued strength of the data surprised us,” Ashworth and Viswanathan write. Goldman Sachs Research expects home prices, adjusted seasonally and accounting for the full year, to appreciate 2% in 2023, 1.9% in 2024, and 2.8% in 2025.

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