AUGUSTA, Maine — Maine real estate agents expect the state’s housing market to stabilize in 2024 after the Federal Reserve announced planned interest rate cuts in 2024 on Wednesday.
Federal Reserve Chair Jerome Powell said the nation’s central bank intends to cut the benchmark interest rate by a quarter of a point on three occasions next year. Powell also said they are likely done raising rates because of how inflation has cooled. The current benchmark interest rate at 5.4%, the highest level in 22 years.
In October, MaineHousing released a report showing that the state is on track to be short more than 80,000 homes by the year 2023.
Maine’s housing market is coming out of a volatile period post-COVID-19 pandemic. Houses are staying on the market longer, closer to 30 days, according to real estate agent Tyler Gaudet, of Sprague & Curtis Real Estate.
The current rate has increased costs for mortgages, auto loans, business borrowing, and many other forms of credit. Higher mortgage rates have sharply reduced home sales. Gaudet said lower interest rates could lead to more buyers in the housing market, which could increase house prices. He said one option is to buy now and refinance later.
“A lot of lenders have identified that need or that reluctance to jump into a higher interest rate. so there are a lot of them are offering reduced fees for refinancing in the year as they know rates will drop,” Gaudet said. “That can help kind of alleviate some of the concerns in the back of the buyers’ heads.”
Home values continue to rise in Maine, though a lack of inventory is leading to lower-than-normal sales activity, according to the Maine Association of Realtors.
In October 2023, 1,435 single-family homes were bought or sold, according to Maine Listings. That represents a drop of more than 10 percent compared to October 2022. Home prices, however, rose more than 13 percent, to a median sales price of $376,000.
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