Home Prices Flat In 2024?

Kyle Seagraves
December 26, 2023

News You Should Know:

1. 2023 Housing Market Shows Increase in Home Sellers; Prices Expected to Remain Flat in 2024

According to a report on Housing Wire, an increase in home sellers in 2023's housing market is observed with 11% more new sellers compared to the previous year, matching similar growth in buyers' numbers and potentially reversing the trend of low total sales volume.

📈 Rising Inventory: The housing market in 2023 has fewer home sellers which affected the total sales volume. As of now, there are 539,000 unsold single-family homes, which is 3.2% higher than the previous year.
🌊 Sellers vs. Buyers Balance: The once dwindling number of home sellers is beginning to increase. This trend is being balanced by a corresponding increase in buyers, with 11% more new sellers and 10% more immediate sales compared to the previous year.
📝 Contract Growths: The housing market, which was contracting until October, is showing signs of consistent expansion with a 7.7% increase in new contracts started compared to the same week a year ago.
💰 Price Changes: Home prices in 2023 are projected to finish with a gain of 2%-3% over the last year. However, current indicators predict flat home price changes for 2024. A total 37.6% of the homes on the market reduced their prices, a figure expected to normalize in January.

2. Housing Market Booms as Prices Reach New High Amid Declining Mortgage Rates

According to a report by Redfin, the U.S. housing market has seen a surge in activity with prices reaching a new high, due to declining mortgage rates.

🏠 Market Surge: The U.S. housing market saw increased activity as prices reached their highest since last October, driven by declining mortgage rates.
💸 Median Price Increase: The median U.S. home sale price rose to $408,732 in November, up by 3.7% from the previous year, while pending home sales also rose by 2%.
📈 Slight Uptick in New Listings: New listings saw a modest increase of 1.3%, marking the first year-on-year rise in over 18 months, indicating a gradual return of sellers to the market.
❗ Uncertainty Still Lingers: Despite increased activity, there are regional disparities, high rate of deal cancellations, and economic issues holding many prospective buyers back.

3. Housing Market Thaws as Mortgage Rates Fall Below 7% and Home Sales Revive

According to a report by Fortune, the previously stagnant housing market is beginning to revive as mortgage rates fall below 7%; this has resulted in a surge in home listings and pending sales.

🏠 Relief from High Rates: After dealing with significantly high mortgage rates and continuous increase in home prices, potential homeowners are seeing a drop with the average 30-year fixed mortgage rate falling to 6.64%.
📈 Revival of Real Estate: Recreation in the real estate market has started being observed as new listings and pending home sales in November reached their highest levels in about a year, suggesting the end of buyers and sellers' wait on the sidelines.
🎢 Market Volatility: Despite the decreasing mortgage rates igniting some activity in the housing market, several experts hold the consensus that it's too early to predict the exact direction of the 2024 housing market, with significant cancellations and concerns over rising home prices.
💡 Future Outlook: Experts note that economic uncertainties are causing some buyers and sellers to hesitate, and the evolution and understanding of several factors in the real estate market will be important in shaping the housing landscape next year.

4. Federal Reserve's Lower Rate Promises Boosts Economy and Housing Market

In a move widely seen as positive for the U.S. economy, the Federal Reserve has dropped bond yields and mortgage rates, with the latter decreasing from 7% to below 6.5%, suggesting the possibility of an end to the Fed rate-hike cycle. Read More

📉 Fed's Decision Impact: The Federal Reserve shifted to a dovish stance lowering bond yields and mortgage rates, which had a positive effect on the U.S. economy.
💰 Mortgage Rates and Purchase Applications: Mortgage rates have dropped, leading to gains in purchase application data over the last five weeks, indicating a likely positive year despite reaching 8% mortgage rates earlier.
🏡 Real Estate Inventory Updates: Despite seasonality-induced inventory decline and higher mortgage rates earlier this year, new listing data shows stability and growth against the backdrop of the historical lows.
🏷️ Home Price Reductions: Even with high mortgage rates, the percentage of houses taking price cuts was lower than the previous year. With the recent fall in mortgage rates, this percentage is anticipated to reduce further.

5. Fannie Mae Foresees Modest 2024 Downturn Despite Rate Cuts, Predicts Growth in 2025

Even after three rate cuts by Jerome Powell, the Fannie Mae Economic and Strategic Research group predicts a modest economic downturn in 2024, believing a combination of home price increases and high interest rates will slow recovery from recessionary levels of housing activity.

📉 Downturn Despite Cuts: Despite announced rate cuts by Jerome Powell, the Fannie Mae ESR group still anticipates a modest economic downturn for 2024.
🏠 Home Market Rebound: Since early November, mortgage applications show a 15% rebound, sparking hopes for a "slow but meaningful recovery" in the home sales sector for 2024.
🚧 Sales Hindrances Persist: Despite budding recovery signs, issues like affordability and lack of resale inventory, plaguing home sales in 2023, are expected to continue.
🏘️ Mixed Real Estate Projections: Forecasts for 2024 vary widely, with projected existing home sales rates between 4.21 million to 5.07 million and new home sales rates between 680,000 to 840,000. Fannie Mae stands as the least optimistic forecaster.

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