There is certainly no lack of speculation about what we should expect from the economy as we head into the second half of 2024 and, particularly, interest rates. We look at what industry experts are saying about the current housing market, and what we should expect in the coming months.
National Housing & Economic Forecast 2024 Midyear Update
According to Realtor.com, long-awaited mortgage rate relief finally arrives this summer. Mortgage rates have been revised slightly lower as signals from the economy suggest that it will be appropriate for the Fed to begin to cut its Federal Funds rate in 2024. The yearly mortgage rate average forecast is down to 6.7%, and the year-end forecast has been revised to 6.3% from 6.5%.
Home price growth also has been much stronger than forecast as the U.S. economy remains resilient in the face of a higher rate environment. As a result, the annual forecast has gone from a decline of 1.7% to a gain of 4.6% for 2024.
Housing Market Predictions For 2024: When Will Home Prices Be Affordable Again?
The housing market is entering a transitional phase. While summer sales have been tepid thus far, there are signs that activity could heat up by the end of the summer as mortgage rates edge down and much-needed resale inventory continues to enter the market, giving buyers more options.
Mortgage Rates Plunge To 6.47%—the Lowest in Over a Year—as ‘Buyer-Friendly Trend’ Revs Up
As the economy cools and the Federal Reserve gets closer to its target inflation rate of 2%, investors have upped their expectations to two rate cuts this year. Buyers and sellers might see mortgage rates drop in September and December. “Mortgage rate relief is arriving quicker than many expected, and the recent downward trend is encouraging news for potential homebuyers who have been waiting until next year to participate in the market,” says Realtor.com senior economist Ralph McLaughlin.
The NAR Settlement is a Wild Card
This settlement is slated to take effect on Aug. 17, 2024, and will have ramifications for the real estate industry as homebuyers, home sellers, and industry professionals figure out how to adjust to new ways of doing business. There has been speculation about how this will affect commissions and house prices. The expectation is that it will depend on macro conditions as much as industry and consumer adaptations and that any adjustments are likely to happen gradually over time.
If They Build It, Will Buyers Come?
Home buyers want more inventory. Builders say they have it. Home builders across the country plan to ramp up construction this year, following two years of relatively sluggish activity. New-home sales have been accounting for a growing portion of home sales—in 2023, they were more than 30% of the market, compared to more historical averages of 10% to 12%, according to the National Association of Home Builders.