Fed's decisions on rates in the second half of the year will determine direction of mortgage rates. 

Rate hikes by the Federal Reserve are taking a toll on the housing market, with existing home sales pulling back 3.4% in April, according to the National Association of Realtors. Over the past year, home sales fell 23.2%, while home prices dipped 1.7% to a median price of $388,800. The higher interest rates are making it more challenging for prospective homebuyers to purchase their dream homes and homeowners looking to refinance. For the latter, high interest rates make it harder for homeowners to refinance at rates lower than their existing mortgage. Many homeowners refinanced their homes during the pandemic when interest rates were at record lows. When mortgage rates will reverse course is anyone's guess, but we wanted experts to weigh in. Understanding where interest rates are headed can help homebuyers and homeowners alike better understand the options available to them. Organizations like Fannie Mae and the Mortgage Bankers Association forecast that the average rate on 30-year fixed-rate mortgages will decline throughout 2023, continuing into the first quarter of 2024. Peter Idziak, senior associate at Polunsky Beitel Green said, "If the Fed stops raising rates because the data shows the economy weakening and inflation coming down further, then I would expect mortgage rates to decrease during the second half of 2023." Chief Economist at First American Financial Corp, Mark Fleming, says an interest rate drop may not happen for several months. "Possibly in 2024, but it will depend on the Fed's decisions about raising rates in the second half of the year," says Fleming. "And even if they do go down, it won't be back to the rates of yesteryear. 6% mortgage rates used to be normal, and that's more reasonable to expect too." Adam Sharif, founder and chief strategist of nxtCRE—a platform for commercial real estate investors—agrees. He adds, "If rates go down, it will be next year and not by much. Today's interest rates are considered normal by historical measures."

Source: CBS News