Home prices in the United States could see another 5% jump in 2024 despite a recent uptick in housing inventory, according to a report.
In recent months, new home listings on the market rose by 16%, renewing hope that home prices would come down. However, research firm Capital Economics forecasted a 5% surge in home prices this year, citing a lack of inventory on the market, per Business Insider.
The median price of homes is currently at $412,095, according to Redfin. That already marked a 6.4% year-over-year increase. With the forecasted 5% increase this year, home prices could increase to $432,699.
What Is Pushing Home Prices?
While new listings have increased by 16%, Capital Economics estimated that the market is still short 400,000 units for the supply to return to "normal" levels. Soaring mortgage rates also contributed to a lack of inventory.
In the week ending Apr. 4, the rate for the 30-year fixed-term mortgage was 6.82%, while the rate for the 15-year term was 6.06%, data from Freddie Mac showed. In addition, mortgage rates are expected to stay above the 6% range through 2025. High rates, Capital Economics said, is discouraging existing homeowners from putting their properties for sale.
"We think that reports of a wave of new resale supply coming onto the market are overblown. While the number of homes being listed for sale has increased compared to last year, it is still low by historical standards, as mortgage rate 'lock-in' continues to curb the number of homes put up for sale. That supports our upbeat call on house prices this year," Thomas Ryan, the firm's property economist, said in a note on Tuesday.
Despite rising home prices, Ryan noted that the demand for homes has increased. Houses listed on the market are now selling three days faster on average compared to last year, according to data from Realtor.com.
"Ultimately the key to a full recovery in existing homes is much lower mortgage rates," Ryan said. "That tight supply paired with a recovery in buyer demand should keep competition for homes strong and support prices."
