Wall Street isn't expecting any surprises from the Fed. Instead, it's all about the "dot plot"

The Federal Reserve holding steady once again and keeping interest rates in the higher-for-longer realm likely will keep homebuyer demand muted, Fitch Ratings noted Wednesday.

“The latest Fed announcement confirmed that, despite likely short-term rate cuts later this year, mortgage rates will not fall enough to drive meaningfully higher origination volumes in 2024," Eric Orenstein, senior director, Fitch Ratings, wrote Wednesday.

Home sales fell off a cliff in 2023, dropping 17% from a yearly high in February and hitting a low in October, a month when the average 30-year mortgage rate hit a 23-year high of 7.79%. During the week ended March 14, the average 30-year fixed-rate mortgage was 6.74%.

Heading into 2024, however, industry economists were optimistic the tide would turn. The Mortgage Bankers Association forecast that mortgage origination volume would increase by 19%, to 5.2 million loans in 2024.

Existing home sales picked up in January, rising 3.1% from December. The February data will be released next week.

"Eventually, mortgage loan volumes should normalize with lower rates, though there are likely several more challenging quarters ahead for mortgage companies,” Orenstein noted.