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As 2024 draws to a close, the housing market remains a mix of challenges and opportunities. With historically high home prices, persistently low inventory, and evolving mortgage rates, the dynamics of buying and selling are anything but straightforward. Here’s a closer look at what experts predict for the remainder of the year and what it could mean for you.
Key Takeaways
- Sellers remain in control: Low inventory levels give sellers the upper hand, keeping competition tight.
- Mortgage rates cooling, but still high: After peaking above 8% in 2023, rates have eased to 6.88% as of October 2024, offering some relief but remaining high by historical standards.
- Affordability concerns linger: Elevated home prices and borrowing costs continue to deter many would-be buyers.
- Lower rates could spur activity: Further decreases in mortgage rates could motivate both buyers and sellers, improving inventory and market movement.
Market Conditions: What’s Happening Now?
The median sale price for an existing home in September hit $404,500, according to the National Association of Realtors (NAR)—a record high for September and just shy of the all-time peak. Meanwhile, housing inventory remains tight, with a 4.3-month supply, still below the 5-6 months needed for a balanced market.
Mortgage rates, which skyrocketed in 2022 during the Federal Reserve’s inflation-fighting efforts, are starting to ease thanks to the Fed’s recent rate-cutting cycle. One more rate cut is expected before the end of the year, which could offer a boost to both buyers and sellers.
What to Watch in Late 2024
Mortgage Rates
While the average 30-year fixed mortgage rate has cooled to 6.88%, it’s still significantly higher than many homeowners’ locked-in rates. This keeps many sellers on the sidelines, reluctant to trade a low-rate mortgage for a higher one. However, even a slight drop in rates could encourage more homeowners to sell, increasing inventory and spurring transactions.
Housing Inventory
Housing supply is growing slowly, with a 23% increase in inventory year-over-year as of September. But at just 1.39 million units, the market still heavily favors sellers. According to Lawrence Yun, NAR’s Chief Economist, “More supply is beginning to appear, and this could be an early indicator of more home sales later.” However, a significant inventory boost is unlikely in the short term without either a surge in new listings or a wave of new construction.
Home Prices
Home prices remain stubbornly high, driven by low inventory and steady demand. While some buyers may hope for prices to drop, experts suggest this is unlikely. Mortgage delinquency rates are at historic lows, and sellers aren’t under pressure to reduce prices.
Commission Changes
A recent shift in how real estate commissions are handled may impact affordability. Under new rules, buyers may now be responsible for covering their agent’s commission—a change that could save sellers money but add to buyers’ upfront costs. The long-term effects on home prices and buyer behavior remain to be seen.
Will 2024 Be a Buyer’s or Seller’s Market?
Despite modest inventory growth, the market remains firmly in sellers’ favor. Tight supply and high demand continue to drive competition. “The plague of low inventory won’t be cured in the short term,” says Greg McBride, Chief Financial Analyst at Bankrate, adding that first-time buyers should be cautious not to overextend themselves financially.
The Bottom Line
The remainder of 2024 is shaping up to be a complex time for both buyers and sellers. While cooling mortgage rates may bring some relief, high prices and limited inventory will likely keep the market competitive.
Navigating these conditions can be tricky, but you don’t have to go it alone. Whether you’re considering buying, selling, or simply exploring your options, an experienced local real estate agent can provide the guidance you need to make informed decisions. Reach out today to get started on your real estate journey!
Original article: Housing Market 2024 Predictions | Bankrate
