Similarly, 38 of 47 respondents in the Bloomberg poll conducted Dec. 8-10 said Fed interest-rate increases would prompt a rise in the 30-year mortgage rate next year. Eight said mortgage rates will stay the same, while one said the rates would decline.
The average cost of a 30-year mortgage was 3.95 percent in the week ended Dec. 10, hovering near the record-low 3.31 percent reached three years ago in Freddie Mac records that date to 1971. Lawrence Yun, chief economist at the National Association of Realtors, sees the rate rising to around 4.5 percent by the end of next year, which would still undercut the 10-year average of 4.87 percent.
If mortgage rates rise, buyers of low-end homes may be more sensitive to the change than people seeking luxury abodes. While 53 percent of potential buyers seeking properties worth $1 million to $2 million said mortgage rates were either "important" or "very important" in their decision, 71 percent of those looking for homes of $250,000 or less said the same, according to a November survey by broker Redfin Corp.
Housing probably won't fall apart amid an increase in borrowing costs, however. The residential real estate market should keep up gains in 2016 as older millennials have children and look for bigger homes, Diane Swonk, chief economist at Chicago-based Mesirow Financial Holdings Inc., said in a Dec. 10 research note. At the same time, housing could face some of the same hurdles as this year, including rising prices for both buyers and renters as builders struggle to keep up with demand.
Almost all economists surveyed by Bloomberg project the Federal Reserve will raise its benchmark interest rate Wednesday for the first time since 2006.