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Last week, mortgage rates fell for the first time in over a month, with the 30-year fixed mortgage rate hitting 7.09%.

Yahoo Finance's Rebecca Chen reports:

Recent interest rate volatility – including this week's 7.22% decline and last month's steady increase – has caused some financial institutions to change their mortgage outlook for the remainder of 2024.

“An environment where interest rates remain above 7 percent impacts both sellers and buyers. Many potential sellers remain hesitant to put their home up for sale, giving up lower mortgage rates from previous years, negatively impacting supply and keeping home prices high,” said Sam Khater, chief economist at Freddie Mac. “These increased property prices increase the overall affordability challenges faced by prospective buyers in this high-price environment.”

Robust economic data and stubborn inflation have caused real estate experts to change their forecast for where interest rates will end up at the end of 2024.

Fannie Mae, a government-backed mortgage lender, raised its year-end forecast to 6.4% from 5.9% earlier this year.

“Our … forecast is for the Fed to cut interest rates by 25 basis points twice in the fall,” Fannie Mae chief economist Douglas Duncan told Yahoo Finance.

The Federal Reserve kept interest rates stable last week. Meanwhile, mortgage rates, influenced by the Fed's benchmark, have risen above 7% in the past three weeks.

To meet or approach the revised forecast, Duncan said core personal consumption expenditure (PCE) – the Fed's preferred inflation indicator – would need to decline toward 2% for at least three consecutive months. Recent core PCE rose 2.8% year-over-year in March.

The National Association of Realtors (NAR) now expects average interest rates to settle at 6.5% by the end of the year, compared to the 6.3% forecast at the start of the year.

“The Federal Reserve has delayed rate cuts,” said Lawrence Yun, chief economist at NAR. “I would have thought interest rates would be lower by now and the rate cuts would have started. Whatever interest rate cuts the Federal Reserve doesn't make this year will simply be postponed until 2025. They are calling for a rate cut in September, but “we'll see.”