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Thanks in part to the area’s expensive homes, faster-than-normal home price appreciation and high share of people waiting longer than average to sell their homes, Fairfield County will likely see a slower recovery in home sales even as interest rates fall next year. Hartford and New Haven, however, could see bigger boosts in demand.

That’s the conclusion of economists at the National Association of Realtors in a new, metro area-level analysis of the nation’s housing markets’ prospects in 2024.

Top officials at the Federal Reserve are forecasting that they will cut the central bank’s benchmark interest rate 75 basis points, to 3.75 percent, over the course of next year according to predictions released yesterday along with the Fed’s decision to hold rates steady for its third straight meeting. While it’s uncertain just when those rate cuts will arrive, traders on bond markets have already begun reacting to the Fed’s announcement, signalling the potential for mortgage rates to fall from this week’s Freddie Mac average of 6.95 percent for a 30-year, fixed-rate residential loan.

NAR’s report flagged Texas’ biggest metros, along with three Midwest and Southern markets, the Washington, D.C. and Philadelphia areas and Portland, Maine as the 10 markets with the most pent-up demand nation-wide

“The demand for housing will recover from falling mortgage rates and rising income,” NAR chief economist Lawrence Yun said in a statement accompanying his team’s report Wednesday. “In addition, housing inventory is expected to rise by around 30% as more sellers begin to list after delaying selling over the past two years. The selected top 10 U.S. markets will experience faster recovery in home sales.”

NAR’s report combined a number of factors to generate its ranking, including the share of buyers who could afford to return to the market as mortgage interest rates fall, a market’s affordability and the share of high-earning Millennials moving to each market from out-of-state.

Only around 4.1 percent of Fairfield County homebuyers and 4.3 percent of Greater Hartford and New Haven-area homebuyers could afford to return to the market if mortgage rates fell to 6.5 percent, Yun’s team said. That compares to 5.2 percent in Worcester, Massachusetts, 5.1 percent in Austin, Texas – the market with the most pent-up demand according to NAR – and 3.9 percent in the Boston area.

Nation-wide, that figure is an even 4 percent.

Prices for houses and condominiums are growing quickly in all three Connecticut markets, NAR said, but only 14.5 percent of renters can afford the median-priced home in Fairfield County and 19 percent of October’s listings in the area were affordable to first-time buyers. By comparison, 20 percent of renters can afford the median-priced home in the Hartford metro and 19.2 percent can do the same in the New Haven area. Thirty-eight percent and 25 percent of October’s listings in the area were affordable to first-time buyers in Hartford and New Haven, respectively.

The average rate on a 30-year mortgage dropped to 6.95 percent from 7.03 percent this week, mortgage buyer Freddie Mac said today. A year ago, the rate averaged 6.31 percent. The latest drop in rates is the seventh in as many weeks. Mortgage rates have been easing since late October, when they reached 7.79 percent, the highest level since late 2000.

The pullback has echoed a decline in the 10-year Treasury yield, which lenders use as a guide to pricing loans. The yield, which in mid October surged to its highest level since 2007, has been falling on hopes that inflation has cooled enough for the Federal Reserve to finally stop raising interest rates.

Those hopes strengthened Wednesday after the Fed held its main interest rate steady for the third straight time, and its officials signaled that they expect to begin cutting rates beginning as early as next summer.

“Given inflation continues to decelerate and the Federal Reserve Board’s current expectations that they will lower the federal funds target rate next year, we likely will see a gradual thawing of the housing market in the new year,” Sam Khater, Freddie Mac’s chief economist, said in a statement.

Material from the Associated Press was used in this report.