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Mortgage rates continue to remain elevated as U.S. home prices hit record highs in 2023 as a lack of supply in the housing market overarched any setback to demand that elevated mortgage rates might have caused. BlackRock added that mortgage rates will more than likely remain elevated for some time.
The asset manager added that the Federal Reserve may be at the end of its rate hike cycle but it will more than likely not start aggressively lowering rates in 2024 as inflation still remains above the Fed’s 2% target.
“As long as home prices and rents stay high, overall inflation is unlikely to dramatically decline, helping to keep mortgage rates higher for longer than many investors – and prospective homebuyers – would like,” BlackRock noted as shelter inflation tends to be relatively sticky.
Furthermore, the financial institution added: “The full impact of higher mortgage rates is likely still to be felt, and housing is more likely to be a drag rather than a contributor to growth in the coming year.”
For investors looking to monitor the housing market further, outlined below are a handful of real estate focused stocks and exchange traded funds:
Real Estate-Based Stocks
- Prologis Inc (PLD)
- American Tower Corp (AMT)
- Simon Property Group Inc (SPG)
- Welltower Inc (WELL)
- AvalonBay Communities Inc (AVB)
Real Estate-Based ETFs
- Vanguard Real Estate ETF (NYSEARCA:VNQ)
- Vanguard Real Estate ETF (NYSEARCA:XLRE)
- iShares U.S. Real Estate ETF (NYSEARCA:IYR)
- Schwab US REIT ETF (SCHH)
- iShares Residential and Multisector Real Estate ETF (NYSEARCA:REZ)
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