Mid-Year Real Estate Market Update for 2024: Essential Insights for Buyers and Sellers

As 2023 drew to a close, the Federal Reserve predicted several benchmark rate cuts for the coming year, leading some analysts to forecast a drop in mortgage rates from near 8% to around 6% by mid-2024. However, persistent inflation has disrupted these plans, keeping the average 30-year mortgage rate around 7% so far this year.

While high mortgage rates continue to slow home sales and reduce affordability, there are positive signs for homebuyers. Nationwide, the inventory shortage is beginning to ease, and more starter homes are hitting the market, slowing the growth of median home prices and providing some relief to budget-conscious buyers.

Sellers are also adjusting to the high-rate environment, with a growing number listing their properties. Despite this, economists predict that a persistent housing deficit, combined with tighter lending standards and high levels of home equity, will maintain market stability.

Read on to discover this year's most crucial real estate news and gain insights into what analysts predict for the rest of 2024.

Mortgage Rate Cuts Delayed by Inflation

On May 1, the Federal Reserve decided to keep its overnight rate at a 23-year high due to still-elevated inflation numbers.

While mortgage rates are not directly tied to the federal funds rate, they often move in tandem. Therefore, the Fed's decision indicates that significant mortgage rate reductions—and a real estate market rebound—are further away than many experts had hoped.

"The housing market is highly sensitive to interest rates. When rates rise, activity usually decreases," explained Realtor.com chief economist Danielle Hale. "This sensitivity is heightened now because many people are locked into low mortgage rates, and first-time buyers face high prices and borrowing costs."

Experts now suggest that the first benchmark rate cut might not occur until September, meaning homebuyers looking for lower mortgage rates will need to be patient.

"We're unlikely to see significant declines in mortgage rates until after the Fed's first cut. If this is delayed, we probably won't see rates much below 6.5% by year's end," predicted Rick Sharga, CEO at CJ Patrick Company.

What does this mean for you? Mortgage rates aren't expected to drop significantly soon. However, waiting to buy might not be wise, as a rate drop could trigger a surge in home prices due to pent-up demand. Contact us for a free consultation to plan your best course for buying or selling a home.

Buyers Find More Options as Sellers Return

There is good news for buyers who have struggled to find the right property: more Americans are listing their homes for sale. This increased inventory offers buyers a better chance to find a suitable home and potentially secure a better deal.

In 2023, inventory remained scarce as homeowners clung to their favorable mortgage rates. However, a recent Realtor.com survey indicates that more homeowners are now ready to sell.

While many potential sellers still feel "locked in" by their current mortgage, this sentiment is slightly decreasing (79% now versus 82% in 2023). Additionally, nearly one-third of these "locked-in" owners need to sell soon for personal reasons, and the vast majority (86%) have been considering selling for over a year.

Renewed optimism is also a factor. "Both our 'good time to buy' and 'good time to sell' measures continued their slow upward trend this month," noted Fannie Mae Chief Economist Doug Duncan in April.

Despite this, the current home inventory remains below pre-pandemic levels. "For the first four months of this year, the inventory of homes actively for sale was the highest since 2020. However, April's inventory is still down 35.9% compared to typical 2017-2019 levels."

What does this mean for you? If you've struggled to find a home, now might be a good time to try again. Increased inventory and relatively low buyer competition could make this the perfect time to move. Contact us if you're ready to start your home search.

If you're planning to sell, acting now might be advantageous. As inventory grows, standing out becomes more challenging. We can help you maximize your profits with a professional home assessment and marketing plan. Schedule a free consultation with us today.

Home Prices Rise at a Manageable Pace

Homebuyers dealing with high borrowing costs have reason to celebrate. The national median home price has stabilized over the past year, thanks to an influx of smaller, more affordable homes.

Home sellers are also adjusting their pricing expectations. In many regions, only 12% expect a bidding war (down from 23% last year), and just 15% anticipate selling above list price (versus 31% in 2023).

But don't expect a significant price drop. According to Realtor.com's April Housing Market Trends Report, "The median list price grew by 3.8% on an adjusted per-square-foot basis, as homes continue to retain their value despite increased inventory."

Dr. Selma Hepp, chief economist for CoreLogic, expects home prices to rise gradually throughout 2024. "Spring home price gains are strong despite mortgage rate volatility. Increased inventory will likely lead to more options for buyers and fewer bidding wars, which typically keeps price growth in check."

What does this mean for you? More affordable housing stock is excellent news, especially for first-time buyers. With home values expected to rise, investing in real estate could help you build wealth over time. Contact us to discuss your goals and budget, and we can help you decide if now is the right time to enter the property market.

Homeownership Dream Remains Strong Despite Challenges

Surveys show that the desire to own a home is still strong in America, despite financial hurdles. A recent Realtor.com poll found that 55% of Millennials and 40% of Gen Z respondents believe now is a good time to buy a home.

Fannie Mae Chief Economist Doug Duncan noted that buyers are adapting to the new economic reality. "With pandemic-era low rates behind us, some households are overcoming last year's rate hike shock, which could help revive the housing market. We expect a gradual increase in home listings and sales transactions in the coming year."

The Realtor.com study also found that even a slight drop in mortgage rates could significantly boost homebuyer demand and affordability. Forty percent of buyers would find a home purchase attainable if rates fall below 6%, and an additional 32% plan to buy if rates drop below 5%.

Determined homebuyers are employing various strategies to afford homes, such as shopping multiple lenders (52%), purchasing discount points to lower rates (36%), and opting for adjustable-rate mortgages (36%). Over three-quarters of today's buyers hope to refinance to a lower rate in the future.

Despite the challenges, many buyers remain committed to homeownership, citing financial benefits, stability, and more space as their primary motivations.

What does this mean for you? If you're dreaming of a new home, let's talk. We can help you explore your options and connect you with a mortgage professional to discuss strategies for making your monthly payments more affordable. Remember, you can often refinance if rates drop in the future.

If you plan to sell, working with an experienced agent is crucial to maximize your profit margins and attract qualified buyers. Contact us for a copy of our comprehensive Property Marketing Plan.

We're Here to Guide You

While national housing reports provide a broad outlook, real estate is primarily local. As local market experts, we understand what impacts sales and drives home values in your neighborhood. As your trusted partner, we can navigate the market's twists and turns together.

If you're considering buying or selling a home in 2024, contact us now to schedule a free consultation. Let's collaborate and craft a plan to achieve your real estate goals.