Freddie Mac’s 2024 Economic Outlook: Moderate Growth Expected

February 09, 2024

Freddie Mac’s 2024 Economic Outlook: Moderate Growth Expected

Economic Outlook

Freddie Mac’s Deputy Chief Economist and Senior Director, Economic Housing & Research, Len Kiefer, and its Multifamily Research team Senior Director, Sara Hoffmann, released their outlook for 2024, which acknowledges that while the economy showed “tremendous resilience” in 2023, the coming year will still see persistent headwinds. That said, there is optimism overall for growth.

While the economy expanded at a rate of 2.5% in 2023 (up from a 1.9% increase the year prior) and added 2.7 million jobs throughout the year, there are signs that the labor market is softening, with a modest uptick in the unemployment rate of 0.3% across the year. While unemployment is still very low by historic standards, at 3.7%, the year ended with declining labor force participation, growth rates and job openings, hinting at a correction in this area.

“If inflation continues to moderate as expected, the Federal Reserve will likely pivot toward cutting interest rates later this year. As a result, we expect mortgage rates to ease modestly throughout the year while remaining in the 6% range,” writes Kiefer on the economy. 

Multifamily Outlook

Due to sustained higher home prices and interest rates, the multifamily rental market will continue to see demand in 2024. The big story is the supply funnel – since 2022, completions are up 24% to 441,000 annually as of year-end 2023 – and this delivery volume will moderate rent increases overall. Freddie Mac anticipates modest rent growth at 2.5%, which is below the average from 2000-2022. The downward pressure on rent will be even more exaggerated in some concentrated areas where higher levels of supply exist, such as the Sunbelt and Mountain West regions.

“Although current home prices and interest rates will not necessarily create long-term demand for renting, these factors will help keep occupancy stable as more supply enters the market,” Freddie Mac’s report states.

Overall, Freddie Mac’s forecast calls for an upward trajectory in deal volume and rent growth in 2024, and they are predicting that as the 10-year Treasury stabilizes, that more transaction will come into the market. As a result, the multifamily market is expected to see moderate growth in the coming year.

Read more of Freddie Mac’s 2024 Economic Outlook.