Realtor.com has officially published its 2024 Forecast Update report, which reveals that home price growth and inventory are now predicted to end the year with year-over-year gains. More on the same would reveal how for sale inventory is forecasted to see the biggest change across all of Realtor.com’s initial predictions. Furthermore, existing home median sales price is now predicted to increase year-over-year despite elevated mortgage rates, rising inventory, and homes sitting on the market for longer stretches. To give you some context, earlier this month, mortgage rates dropped to their lowest rate since May 2023. This would play a key role in Realtor.com revising its year-end mortgage rate forecast to 6.3% from 6.5%. Next up, even though affordability issues, as well as mortgage rates continue to significantly limit buying power, the new forecast update projects an increase in home sales to 4.1 million, marking an annual increase of 0.8%. On top of that, the report informed us that, while there has been more inventory than expected, high mortgage rates managed to have a markedly dampening effect on home sales. An example relaying the same is rooted in June’s Existing Home Sales which dropped to 3.89M, the lowest level in 6 months. Surely, lower mortgage rates will help draw homebuyers back into the housing market moving forward, but having said that, little what remains of 2024 isn’t expected to see the sales reach the usual levels. Another major forecast made by Realtor.com’s new report talks to sales prices. You see, despite the affordability issues that we referred to, sales prices in the housing market remain on an upwards trajectory. This trend has got Realtor.com to revise its initial forecast indicating a small price decline of 1.7% in 2024 to a rise of around 4.6%.
“During the first half of this year, we have seen home buyers continue to remain sensitive to mortgage rates, and while home sellers are also affected, the binds of the mortgage rate lock-in effect appear to be loosening for some homeowners,” said Danielle Hale, Chief Economist at Realtor.com. “These trends mean that home sales in 2024 will eke out only a small gain over 2023, but homebuyers have a fair amount to look forward to in the latter part of the year.”
Turning our attention wards the rise in housing inventory, in the first half of 2024, it climbed up by more than 35% on a year-over-year basis. This turned out to be another deflection from Realtor.com’s initial forecast, which touted inventory to be down by almost 14%. However, in response to the presented growth, the company has now revised estimates, now projecting housing inventory to go upwards at a 14.5% clip. Realtor.com also theorized about the reasons behind it. One factor was that some sellers who postponed their decision to sell last year – hoping that mortgage rates would be lower this spring – were encouraged to act rather swiftly by the better-than-expected mortgage rates at the start of 2024. The other reason was how sellers, who have put their home on the market, seem willing to wait for a buyer rather than delisting, something which translated to a lengthier time on market and inventory accumulating at a higher rate than expected.
“Mortgage rates have finally begun to ease, and this trend is expected to continue as improving inflation enables the Fed to relax its tight policy, boosting homebuyer purchasing power. Furthermore, gains in the number of homes for sale mean that buyers have more negotiating power than they have had in recent years which should help buyers and sellers find the middle ground necessary for more sales. Fall has historically been a shoulder season for the housing market that benefits flexible buyers, and this year is setting up to be even more advantageous,” said Hale.
