The past few years have been particularly difficult for home buyers, and 2024 buyers are facing many of those same challenges. Inventory is low, prices are high, and interest rates are still sitting at around 7 percent.
Here are some of the factors impacting the housing market, and what might be on the horizon over the next couple of years:
Buying a House in 2024: What’s going on with the Housing Market
Right now, high interest rates and home prices are making potential sellers hesitant to list their homes. While they wait for prices and rates to come down, the homes that are on the market become even more valuable, because there are less options than usual. That low inventory is helping to drive up prices even more.
This current housing market offers very little wiggle room for buyers, and it could be like that for a while. That being said, we are starting to see a gradual increase in housing inventory this spring, which could start to bring prices down if the trend continues.
Home Sales and Inventory
Housing inventory has been sitting at historic lows for the past few years, but we are finally starting to see an uptick in 2024. Listings increased by 12 percent in February, and that number is expected to grow throughout the spring and summer months.
Experts say that increase is due to people not wanting to wait anymore to list. Even though interest rates are still high, divorce, marriage, retirement and death are all motivating factors to list a home. We are also seeing more homes from the so-called “silver tsunami,” which represents the wave of baby boomers who will be retiring and putting their homes up for sale.
Buying a House in 2024: High home prices
More inventory will help bring home prices down, but not right away. In February, the National Association of Realtors reported that home prices were up 5.7 percent from the year before, which marks the eighth month of year-over-year increases.
As prices have gone up, they have also outpaced income levels, which only contributes to more hesitant potential buyers.
That being said, experts said they do not expect a housing crash. There are still more buyers than sellers in the market, which is preventing a dramatic drop in housing prices.
2024 Housing Market and Interest Rates
In March, the Federal Reserve announced that it would be holding interest rates steady at 5.25 percent to 5.5 percent. That’s because the current rate of inflation is at 3.15 percent, which is still higher than the 2 percent that the Fed would like it to be at.
As of April 2024, mortgage rates are sitting at 7 to 7.5 percent for a 30-year fixed mortgage. Just a few years ago, in January 2021, mortgage rates had hit a surprising low of 2.65 percent. Rates remained low for most of the year, but began rising steadily with inflation in 2022.
The Fed is still expected to drop rates somewhat in 2024, which could lead to some lower mortgage rates. However, even when the Fed does begin to lower rates, it might take some time before the economy cools off enough for mortgage rates to follow suit.
Potential Housing Outlook
Housing experts seem to agree on a housing market improvement – albeit a very slow one – in 2024 and 2025. As rates fall down and people finally decide to list their homes, there should be a bit more flexibility in the housing market. But this will likely be a gradual change.
If you’re waiting for the housing market to improve before buying or selling, there are some signs that things are changing for the better. However, if you’re not in a rush, it still might be worth holding out for further improvements.
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