Housing Market Expectations for 2024

Some powerful themes have played out in the U.S. housing market over the last few years. The historically low mortgage interest ratesNavigating Mortgage Rates Blog of 2020 and 2021 spurred record home prices and a buying surge. This gave way in 2022 and 2023 to the Federal Reserve’s hike of interest rates to combat inflation.

As we reach the midway point in 2024, the housing market has cooled. Factors impacting the market include high interest rates, economic uncertainty, and affordability issues. Still, we see some promising trends on the horizon that could indicate a shift in housing market expectations for 2024 and into next year. Let’s discuss these top housing market trends. 

What to Expect from Real Estate in 2024?

1. Potential Relief for Mortgage Rates

High mortgage rates have been a major factor in the housing market's slowdown. Fortunately, there's hope for some relief in the latter part of 2024. 

In his July testimony to CongressTestimony Powell20240709a.htm Newsevents, Fed Chairman Jerome Powell indicated a possibility of an interest rate cut later in the year. This would be contingent on data showing inflation is headed toward the 2% target.

This possible decrease could stimulate more activity in home sales. Already in 2024, we’ve seen some positive trends toward lower mortgage rates. Freddie Mac reported on July 18 that the 30-year fixed-rate mortgagePmms dropped to its lowest level in four months. The agency said this incremental reduction in rates — along with a resilient economy — bodes well for the housing market.

2. New Construction Could Be a Bright Spot in the Market

Single-family housing construction starts and completions have seen an upturn in 2024. This comes after experiencing declines in the two preceding years. 

In its June 2024 Monthly Residential Construction ReportNrc Current Index.html Construction, the U.S. Census Bureau reported housing starts for the month were at a seasonally adjusted annual rate of approximately 1.35 million. This represents a 3.0% increase over the May estimate. Housing completions also saw significant gains. The bureau reported an annual rate of 1.71 million completions, an increase of 10.1% over the previous month’s estimate. 

3. Home Prices Increase at a Slower Pace

At the start of 2024, many housing experts predicted home prices would continue rising. The good news is that these increases should be at a more moderate pace compared to previous years. So far, we’ve seen this to be the case.

In March, CoreLogic reported home prices roseUs Home Price Insights May 2024 Intelligence by 5.3% year-over-year. The company projected prices would continue to rise throughout 2024, but at a slower pace. Realtor.com also noted that the median list price for homesMay 2024 Data Research had increased slightly upward from April to May 2024.

4. Still a Seller's Market Despite Some Inventory Improvement

Despite some inventory improvement due to new housing completions, the market will likely remain in favor of sellers for 2024. Freddie Mac notes that housing demand has remained highForecast 20240418 Economic Growth Moderated Labor Market Robust Research during the first quarter of 2024, but tight inventory has been a barrier to sales. 

One reason for the tight inventory is that many homeowners locked in lower interest rates during the pandemic. Now that mortgage rates have spikedFixed Rate Mortgages Blog, they are reluctant to sell and give up their low-interest-rate loans. Should the Fed begin a course of interest rate cuts, inventory could improve as more sellers enter the market. 

5. Homebuying Process Will Change with NAR Settlement

Beginning August 17, 2024, new rules go into effect impacting the commissions real estate agents charge for their services. Previously, sellers would typically pay both their agent’s fees and the buyer’s agentRepresenting Buyers Real Estate Blog.

The new regulations — stemming from a $418 million settlementNar Reaches Agreement To Resolve Nationwide Claims Brought By Home Sellers Newsroom with the National Association of REALTORS® (NAR) — enable buyers and sellers to independently negotiate fees with their agents. This could lead to increased competition among agents and reduced transaction costs for sellers.

It could also mean that cash-strapped first-time homebuyers may find it harder to buy a house if they can't afford an agent fee. Exactly how this new ruling will impact the housing market will likely be unclear until year’s end or well into 2025.

Working in Real Estate Is Still Well Worth It

While the housing market in 2024 presents challenges, it also offers opportunities for real estate professionals who can adapt to the changing conditions. The potential for lower mortgage rates, combined with steady price growth and increased construction, suggests a more balanced market may be on the horizon.

There are still plenty of reasons to dive into real estate. Namely, flexible schedules, remote opportunities, and helping clients finally buy their dream homes. Whether you need to get a real estate license in your stateReal Estate License or continue your educationReal Estate Continuing Education to stand out from the competition, Aceable is here for you.