Will lower mortgage rates lead to a surge in home buying?

But here’s the rub: The index assumes that typical family of median income can afford to put down a 20% down payment. With inflation still not fully tamed, many are hard-pressed to come up with that size of a down payment. As a result, the latest index from the National Association of Realtors sits at 91.4.

A broker-focused snapshot into the future

Given that rough calculus, RentSpree CEO/co-founder Michael Lucarelli (pictured) provided broker-focused predictions for 2024. Bottom line: Potentially lowered mortgage rates are no panacea for brokers recovering from a tumultuous 2023.

Lucarelli views the market from a macroeconomic perspective: “Even though we’re seeing a softening a bit on rates, look at the overall environment of affordability,” he told Mortgage Professional America during a telephone interview. “In the past 20 years, you’re seeing an increase in home prices of about 250% – but over that same span of time, salaries have increased by 60%. So there’s really a widening gap with people’s compensation. It doesn’t keep pace with how quickly home prices have been growing.”

Lucarelli added that while mortgage rates could come down later this year, they will still be relatively elevated than what they were in the recent past. “Those are still high, and unlikely to go back down to 5% or 3%,” he said.

Against a backdrop of unaffordability, a growing number of people are forced to rent: “What this does is push more people toward renting,” Lucarelli said. “That is something we’ve seen really across the board, and I think it’s an important point. The more these people are renting and having to rent for longer and longer, you’re posting a steady uptick in the proportion of renters.”