Goldman Sachs 2024 forecast

Plus: More buyers are backing out

October 25, 2023

Good morning! Let's do this — we've got 628 words, a 2.5-minute read for you.

Disclaimer: Average mortgage rates as of Oct 24, 2023. © MND's Daily Rate Index.

1. Home listings surge

In a positive turn for prospective homeowners, September saw a notable 1.4% increase in new listings—the highest monthly rise since February 2022. Still, new listings are 8.9% less than the previous year.

"Many Americans have substantial equity in their homes, and some are choosing to liquidate, even if it means letting go of their favorable mortgage rates. They're concerned about potential home price declines if rates persist. While we anticipate high rates continuing, we also predict sustained high prices into the coming year. The current tight housing supply means even minor increases in listings attract eager buyers, boosting sales,"

Redfin Chief Economist Daryl Fairweather.

2. More buyers are backing out

About 16% (roughly 53,000 U.S. home-purchase agreements) fell through in September as mortgage rates climbed to new highs, according to new data from Redfin. Here’s a breakdown of the elements at play:

  1. Increased Mortgage Payments: Mortgage payments have risen, making buyers more cautious to ensure they're getting a good deal. If buyers don't feel they are getting a good value, they are backing out of deals.

  2. Skyrocketing Insurance Premiums: The cost of insurance has significantly increased, adding to the financial burden and making transactions less appealing.

  3. Disagreements on Repairs: Buyers and sellers are having disagreements on necessary repairs, causing transactions to fall apart.

3. Metros with the highest cancellations

Please note that homes that fell out of contract in September didn’t necessarily go under contract the same month. For example, a home that fell out of contract in September could have gone under contract in August.

  1. Atlanta, GA – 24.4%

  2. Jacksonville, FL – 24.0%

  3. Orlando, FL – 23.6%

  4. Tampa, FL – 22.7%

  5. Fort Lauderdale, FL – 22.0%

  1. San Antonio, TX – 21.2%

  2. Las Vegas, NV – 21.1%

  3. Fort Worth, TX – 21.0%

  4. Miami, FL – 20.5%

  5. Riverside, CA – 20.3%

4. Goldman Sachs 2024 forecast

Mortgage rates will remain high through 2024, dipping to just under 7% at year’s end. That’s according to the latest forecast released by Goldman Sachs. Here’s what to know:

  • Goldman Sachs projects high mortgage rates will keep homeowners on the sidelines, causing the housing turnover rate to fall to its lowest level since the 1990s.

  • The company also says home prices will grow by 1.3% YoY. For comparison, both Zillow and the Mortgage Bankers Association expect home prices to rise by 2.2% by the end of Q4 2024.

5. More Nuggets

✍️ Jamie Dimon and other top bankers visit Saudi Arabia as Israel-Hamas war rages. (CNN)

💸 The big brawl over broker fees. (Axios)

🏦 Banks are about to face tougher scrutiny of discrimination in lending. (Axios)

6. Delinquency rates rise, foreclosures decline

According to Intercontinental Exchange, Inc (ICE) data (formerly Black Knight), the national delinquency rate rose to 3.29% in September, up 12 basis points (BPS) from August and up 13BPS year over year, marking only the second—and largest—annual increase in the past 2.5 years.

  • Serious delinquencies, referring to loans 90+ days overdue, climbed by 7K to 455K. Nevertheless, they are still 6.7% below the rates of September 2019.

  • Meanwhile, early-stage delinquencies (30 and 60 days past due) continued to increase. In September, 48,800 (+5.1%) additional borrowers were 30-days late on their mortgage payments, while 8,700 (+3%) were 60-days late on their mortgage payments.

On a brighter note, the number of loans in active foreclosure plummeted to its lowest since March 2022, reaching 214,000 in September. This number is a significant 25% below the levels seen before the pandemic in 2019.

7. Mortgage applications drop

According to data released by the MBA today, applications to finance home purchases slid to the lowest level since 1995 as mortgage rates approached 8%, underscoring how mounting affordability challenges are crimping demand.

The Mortgage Bankers Association’s index of home-purchase applications decreased 2.2% in the week ended Oct. 20 to 127, the lowest level since 1995. The contract rate on a 30-year fixed mortgage climbed for a seventh-straight week to 7.9%.

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