Home price predictions for the remainer of 2024
Experts generally expect home prices to increase throughout the remaining months of 2024.
- Fannie Mae currently sees home prices rising 4.8% year over year by the end of 2024
- The Mortgage Bankers Association believes prices could rise as much as 4.3% this year
- The National Association of Realtors has more conservative expectations and thinks existing-home prices will inch up just under 2% overall by the end of 2024.
Low home inventory is a chronic problem in the US. This has generally kept home prices up, even as mortgage rates peaked near 7.25% and homebuying demand plummeted last year. Demand may increase if rates go down in the final few months of 2024, so even if home prices were to drop in 2024, they likely wouldn't fall enough to significantly improve affordability on their own.
US Home Sales Slump To Slowest Pace In 6 months
U.S. home sales experienced a significant drop in June, reaching their lowest level in six months since December, according to figures from the National Association of Realtors (NAR) released on Tuesday.
The NAR reported that sales of previously occupied homes fell by 5.4% from May to a seasonally adjusted annual rate of 3.89 million. In addition, three of the four major U.S. regions reported sales declines with year-over-year sales waning in the Northeast, Midwest and South—and were unchanged in the West.
On average, more than one-third of all homes sold in a given year are purchased between March and June. This is known as the spring homebuying season, and it’s been a downer in recent years.
Year-over-year for-sale inventory levels have increased dramatically relative to June 2023 (up 35.7%). Year-over-year closed sales transactions decreased by 3.1%, signaling that despite recent decreases in interest rates, buyers may be slightly less active when compared to June 2023.
Locally in Western Washington:
Median Sales Price
- The median price for residential homes and condominiums sold in June 2024 was $650,000, an increase of 4% compared to June 2023 ($625,000).
- The three counties with the highest median sale prices were San Juan ($950,000), King ($875,000), and Snohomish ($789,497). The three counties with the lowest median sale prices were Columbia ($274,000), Adams ($236,000) and Ferry ($175,000).
Active Listings
- There was a 35.7% increase in the total number of properties listed for sale, with 14,393 active listings on the market at the end of June 2024, compared to 10,607 at the end of June 2023.
- The number of homes for sale increased throughout Washington, with 22 out of 26 counties seeing a double-digit year-over-year increase.
- The six counties with highest increases in active inventory for sale were Douglas (+77.2%), Pierce (+48%), Clark (+46.9%), Snohomish (+46.2%), Lewis (+45.2%), and King (+43.3%).
CoreLogic Chief Economist Selma Hepp says the Pacific Northwest housing market is moving slowly toward normalization. “While increased inventory of homes on the market this spring offered potential home buyers more options, elevated mortgage rates put affordability at the forefront of housing market concerns,” Hepp said.
Where does that leave home buyers and sellers looking at the second half of 2024?
Homebuyers are getting cold feet
Would-be homebuyers are getting a case of cold feet as they confront still elevated mortgage rates and record-high housing prices.
New findings published by Redfin show that a growing number of buyers are backing out of deals to buy a house at the last minute because buying a home is more expensive than ever. About 56,000 home purchases were canceled in June – about 15% of homes that went under contract – the highest percentage of any June on record.
There are some signs that home prices may soon fall.
Statistical reporting showed that one in five homes for sale saw a price cut in July, the highest level of any July on record. It marks a notable increase from the 14.4% pace seen one year ago and is just shy of the 21.7% record set in October 2022.
Listings are up but sales are down, and homes are staying on the market longer.
More than 60% of houses listed are spending at least a month without attracting buyers, according to real estate platform Redfin.
"We're seeing a slow shift from a seller's market to a buyer's market," NAR Chief Economist Lawrence Yun said in a press release. "Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis."
Mortgage rate predictions 2024
Though they're still relatively high, experts generally predict we'll see mortgage rates go down a little bit this year. The average 30-year fixed mortgage rate could end up in the 6.5% to 7% range.
- Fannie Mae thinks rates could end the year around 7%
- The MBA believes 30-year fixed rates could reach 6.5% by the end of 2024
- NAR predicts rates will peak this quarter at 7.1% and drop to 6.5% in the last quarter of the year
Whether mortgage rates actually trend down in 2024, and by how much, depends in part on the path the Federal Reserve takes in its fight against inflation.
The Fed has indicated that it may start cutting the federal funds rate this year, which would remove a lot of upward pressure off of mortgage rates and allow them to fall more substantially. But inflation has remained higher than expected in recent months, so we might have to wait until the fall for a Fed rate cut. This means mortgage rates will likely remain elevated in the near term.
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How likely is a housing market crash in 2024?
Because home prices have increased so dramatically in recent years, doomsayers believe that the housing market is in a bubble, and it's only a matter of time before it bursts and the market crashes. But it's actually pretty unlikely that will happen.
One of the main reasons we're unlikely to see the housing market crash in 2024 has to do with housing inventory. The US simply does not have enough homes to meet demand, which is keeping prices steady.
Years of underbuilding fueled a shortage of homes in the country, a problem that was later exacerbated by the rapid rise in mortgage rates and expensive construction materials.
Higher mortgage rates over the past three years have also created a "golden handcuff" effect in the housing market. Sellers who locked in a record-low mortgage rate of 3% or less during the pandemic began have been reluctant to sell, limiting supply further and leaving few options for eager would-be buyers.
Of course, no one has a crystal ball. If demand were to plummet, home prices could start falling. A severe recession could cause this to happen, for example. But even with a recession, it's not a given that the housing market would crash as a result.
What this means for 2024 homebuyers
If rates drop later this year, it will undoubtedly improve affordability for borrowers, but with that will come increased demand. This will keep home prices high and likely push them up even further. Finding a home in your price range may become even trickier, and you may need to make a lot of offers on homes before you get one accepted.
This comes as the U.S. housing market has been in a slump since 2022, coinciding with the rise in mortgage rates from their pandemic-era lows.
Last year, existing home sales plummeted to a nearly 30-year low as the average rate on a 30-year mortgage soared to a 23-year high of 7.79%, according to mortgage buyer Freddie Mac, AP reported.
Should anyone buy now?
That extra supply around the Seattle metro area is good news for buyers who’ve been sidelined so far this spring and summer, however, the entire region still had only a 2.17-month housing supply in June, below the four to six months seen in a balanced market.
Homebuyers who can afford to buy now should benefit from the wider selection of homes on the market.
Anyone who can afford to pay all cash may also want to buy in the near term.
“Prices have been going up, and they’re probably not going to come down, so there’s really no reason to wait if you’re not waiting for rates to come down,” Redfin's Fairweather said.
You’ve probably heard the news that there are changes coming in terms of how real estate commissions are paid. Learn more about those changes HERE.
Posted by Cary W Porter on
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