Home buyers may see more luck in 2024 as experts predict prices to fall in some places in the country.
Home prices surged this year since the average 30-year fixed-term mortgage rate surpassed 8%. However, mortgage rates have slid since October, falling to 6.95% this week. Experts now believe home sale prices can drop in certain areas of the country, but only if inventory in the housing market improves.
"For the best possible outcome, we'd first need to see inventories of homes for sale turn considerably higher. This additional inventory, in turn, would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels," Gumbinger said, as quoted by Forbes Advisor.
NAR Chief Economist Lawrence Yun also forecasted home sales to rise next year and increase by 13.5% compared to 2023. He also predicted that Austin, Texas, will be the top real estate market to watch in 2024, Yun unveiled during the NAR's fifth annual year-end Real Estate Forecast Summit: The Year Ahead.
Will Housing Supply Increase in 2024?
Housing stock, especially entry-level supply, remains near historic lows. Data from the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) that tracks builder sentiment plunged from 40 in October to 34 in November, per Forbes. A reading of 50 or higher means more builders are optimistic for new construction projects.
Rising materials costs, supply chain issues, and labor shortages stemming from the COVID-19 pandemic all impacted the housing inventory.
The NAR's Housing Shortage Tracker also illustrated that in some cities, particularly San Francisco and Boston, 1 new single-family housing unit permit was issued for every 21 new jobs in July.
There are varying forecasts on whether the housing supply will increase next year, but Rick Sharga, founder and CEO of market intelligence and business advisory firm CJ Patrick Company, predicts that inventory will only improve if mortgage rates fall to 5%.
"I don't expect to see a meaningful increase in the supply of existing homes for sale until mortgage rates are back down in the low 5% range, so probably not in 2024," he said.
