Housing market predictions for the rest of 2024
Key takeaways
- Low levels of inventory mean that sellers continue to have the upper hand in the housing market.
- Mortgage rates have come down from their peak but are still high, and steep home prices are dissuading would-be buyers.
- If rates were to drop further, that would spur the market for both buyers and sellers.
With home prices historically high, inventory still tight and the dust still settling on commission changes enacted late this summer, many prospective sellers and hopeful buyers are feeling nervous about this winter’s housing market.
The median sale price for an existing home in the U.S. was $404,500 in September 2024, according to the National Association of Realtors (NAR). And after briefly rising above 8 percent in October 2023, the average 30-year mortgage rate as of late this October was 6.88 percent — a welcome decrease but still much higher than most homeowners’ locked-in rates.
Home prices, mortgage rates, inventory levels and commissions will all shape housing affordability through the remainder of this year. Curious where these trends may go? Read on to learn what the experts predict for the rest of the 2024 housing market.
What will happen to the housing market for the end of 2024?
Rates roughly doubled back in 2022, thanks in part to the Federal Reserve’s war on inflation, and they have stayed high since. While the Fed does not directly set mortgage rates, mortgage lenders take cues from them, and mortgage rates climbed in tandem with the Fed’s long string of rate hikes.
The Fed has finally started a cycle of much-anticipated rate cuts, and one more is likely coming before the year is out. But with home prices still reaching record heights and demand for homes outpacing housing supply, it seems homebuyers will still be feeling the squeeze through the rest of the year.
- The median home-sale price as of September 2024 was $404,500 — the highest September median NAR has ever recorded and only about $20K short of the all-time high.
- The nation had a 4.3-month supply of housing inventory as of September, per NAR, which is a big improvement over a year ago but still low enough to be considered a seller’s market.
- Home-price growth increased in August 2024 by 4.2 percent, according to S&P CoreLogic’s latest Case-Shiller Index. That marks the index’s 15th consecutive all-time high.
- Bankrate’s latest national survey of large lenders shows the average rate on a 30-year mortgage was 6.88 percent as of October 30, 2024.
- The U.S. inflation rate as of September 2024 was 2.4 percent — getting closer to the Fed’s stated goal of 2 percent, but not quite there yet.
Realtor commission changes
One thing to keep an eye on: Thanks to the settlement of a major federal lawsuit, the way real estate commissions work in the U.S. changed in August. The longstanding structure had been for home sellers to pay both their own agent’s commission and their buyer’s, but now, buyers may have to cover their own agent’s commission fee — which would obviously save sellers money.
How this might affect home prices and affordability remains to be seen. “The new rules mean buyers will have a say in how much they pay buy-side agents,” says Bankrate prinicipal writer Jeff Ostrowski. “Will commissions fall? Will buyers decide to do it themselves, without using buyers’ agents? It could be years before we know the answers.”
Ken Johnson, chair of the real estate program at the University of Mississippi, predicts little will change. “The settlement did nothing to lower the cost of operation for brokers,” Johnson says. “If anything, the cost of operation has been increased. Brokers will find a work around and go back to doing business pretty much as usual.”
Will housing sales decline?
The volume of home sales has continued to soften over the course of 2024: Existing-home sales in September were down by 3.5 percent from last year. However, this trend may pivot if mortgage rates dip further.
“The uncertainty over rates is a contributing factor to slow sales, as existing homeowners choose to stay in their current homes longer to see if rates will drop even further,” says Nina Gidwaney, head of refinance and home equity at Chase Home Lending.
Chen Zhao, who leads the economics team at Redfin, thinks prospective homebuyers may get something of a reprieve thanks to the Fed’s late-2024 rate cuts. “We are not expecting sales to increase dramatically [though], as rates are likely to remain above 6 percent.”
“Lower mortgage rates would help spur home sales activity,” says Selma Hepp, chief economist at CoreLogic. “Declines in mortgage rates [would] drive more sellers to trade their existing home and help add much-needed inventory to the market, leading to more transactions.”
Will housing inventory increase?
Speaking of much-needed inventory, housing supply remains low. It has been inching up, slowly, though: The overall number of existing homes on the market for sale as of September sat at 1.39 million units, up a healthy 23 percent from the previous year. Even so, that represents only a 4.3-month supply, still short of the 5 to 6 months usually needed for a balanced market.
More supply is beginning to appear, and this could be an early indicator of more home sales later.— Lawrence Yun, Chief Economist, National Association of Realtors
“More supply is beginning to appear, and this could be an early indicator of more home sales later as consumers see more choices and home prices no longer perk up,” Yun says.
For inventory levels to improve significantly, though, there would need to be either a surge of homeowners listing their existing properties or a huge amount of new-construction homes hitting the market. Both seem unlikely before the end of the year.
Will home prices go down?
Housing prices have been on fire lately, culminating in historic highs — September’s median of $404,500 is the highest September price ever recorded by NAR. So will home prices drop before next year? Probably not: “Mortgage delinquency rates are at historic lows, and therefore, there are very few distressed property sales,” Yun said. “This will keep home prices steady, and they definitely will not decline in any meaningful way.
Zhao also noted that prices are intricately connected with housing inventory. “Sellers are likely to remain reluctant to give up their low interest rate for a much higher one, so inventory will remain constrained,” she says. “As more time passes, more homeowners may be ‘forced’ to sell due to life events, so inventory may rise from the current anemic levels, but it’s unlikely to increase much. That means that prices are unlikely to fall on a year-over-year basis, unless demand falters.”
Will the rest of 2024 be a buyer’s or seller’s market?
While inventory has been inching up, overall it is still tight enough that the seller’s market seems unlikely to change this year. “The current shortage of inventory suggests it would be hard to [become] a buyer’s market anytime soon,” says Hepp.
“Given expectations about interest rates and supply, demand will probably [continue to] exceed supply,” Zhao says. “Supply is likely to remain below what we would deem a balanced market.”
The plague of low inventory won't be cured in the short-term.— Greg McBride, Bankrate Chief Financial Analyst
“The plague of low inventory won’t be cured in the short-term, and it remains a competitive and frustrating process for first-time homebuyers in particular,” says McBride. “Buyers should be wary of biting off more than can be financially chewed. Home prices are at record highs, and insurance costs are up substantially in many markets. You’re not getting a bargain, and the willingness to walk away might prove to be a good choice.”
Bottom line on the 2024 housing market
The continued combination of high mortgage rates, steep home prices and low inventory levels appear poised to ensure that the remainder of 2024 is a challenging market for both buyers and sellers. But rates have cooled a bit — if that continues through the rest of the year, as some experts predict, then market activity should heat up in response.
The complexities of the current conditions mean that, now more than ever, it’s smart to lean on the guidance of an experienced local real estate agent. If you want to enter the market during the remaining months of 2024, whether as a buyer or a seller, let a pro lead the way for you.
