The new year is right around the corner, and you might be wondering if 2024 will be the right time to buy or sell a home. If you want to make the most informed decision possible, it’s important to know what the experts have to say about what’s ahead for the housing market. Spoiler alert: the projections may be better than you think. Here’s why.
Experts Forecast Ongoing Home Price Appreciation
Take a look at the latest home price forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), and the National Association of Realtors (NAR):
As you can see in the orange bars on the left, on average, experts forecast prices will end this year up about 2.8% overall, and increase by another 1.5% by the end of 2024. That’s big news, considering so many people thought prices would crash this year. The truth is, prices didn’t come tumbling way down in 2023, and that’s because there just weren’t enough homes for sale compared to the number of people who wanted or needed to buy them, and that inventory crunch is still very real. This is the general rule of supply and demand, and it continues to put upward pressure on prices as we move into the new year.
Looking forward, experts project home prices will continue to rise next year, but not quite as much as they did this year. Even though the expected rise in 2024 isn’t as big as in 2023, it’s important to understand home price appreciation is cumulative. In simpler terms, this means if the experts are right, according to the national average, after your home’s value goes up by 2.8% this year, it should go up by another 1.5% next year. That ongoing price growth is a big part of why owning a home can be a smart decision in the long run.
Projections Show Sales Should Increase Slightly Next Year
While 2023 hasn’t seen a lot of home sales relative to more normal years in the housing market, experts are forecasting a bit more activity next year. While expectations are for just a slight uptick in total sales, improved activity next year is a good thing for the housing market, and for buyers and sellers like you. As people continue to move, that opens up options for hopeful buyers who are looking for a home.
So, what do these forecasts show? The housing market is expected to be more active in 2024. That may be in part because there will always be people who need to move. People will get new jobs, have children, get married or divorced – these and other major life changes lead people to move regardless of housing market conditions. That will remain true next year, and for years to come. And if mortgage rates come down, we’ll see even more activity in the housing market.
Bottom Line
If you’re thinking about buying or selling, it’s important to know what the experts are forecasting for the future of the housing market. When you’re in the know about what’s ahead, you can make the most informed decision possible. Connect with Stovall Team to chat about the latest forecasts, and craft a plan for your next move.
11.16.23 Mortgage rates dip to lowest level since September
Mortgage interest rates declined for the third straight week, setting up the possibility of a small end-of-year rally for home sales.
The 30-year fixed-rate mortgage averaged 7.44% in Freddie Mac’s weekly survey, which is the lowest level since late September. The 15-year fixed-rate also dropped slightly, averaging 6.76% for the week.
That combination of economic strength, lower inflation and lower mortgage rates will likely bring potential homebuyers into the market, said Sam Khater, Freddie Mac’s chief economist.
Lisa Sturtevant, chief economist for Bright MLS, agreed that more homebuyers may take advantage of the current conditions before year-end — but could end up disappointed because of the lack of inventory.
“For those homebuyers who can wait, the spring will bring more new listings and lower mortgage rates,” Sturtevant said.
If the economic data continues to trend in the same direction, another rate hike would be far less likely, said Realtor.com Economist Jiayi Xu. She expects mortgage rates to continue their steady decline in the final weeks of the year.
For NAR Deputy Chief Economist Jessica Lautz, Pitbull lyrics — “It’s going down, I’m yellin’ timber” — came to mind when looking at the downward trend in mortgage rates, which she believes will build momentum. And although inventory is low right now, homebuyers may benefit from less competition, she said.
“[Late fall] might be a calmer season to home shop before rates fall into the 6% range in spring and pent-up demand floods into the market,” said Lautz in response to the rate drop.
Even with a steady decline in mortgage rates, confidence continues to erode for the nation’s homebuilders. The National Association of Homebuilders’ confidence index fell six points to 34 in November. It has fallen 22 points since July. But if mortgage rates continue to trend down and existing-homes inventory remains low, confidence should begin to rise in December, said Robert Dietz, NAHB chief economist.
Builders may be uncertain, but homebuyers appear to be feeling more confident, with mortgage applications rising 2.8% this week, according to the Mortgage Bankers Association. Applications are still sitting at relatively low levels, however, as mortgage rates above 7% make for a challenging market, said Joel Kan, MBA’s deputy chief economist.